A recent report from the Royal Institution of Chartered Surveyors signals a significant improvement in the UK housing market, with increased seller activity and optimism in house price growth amidst a stabilizing market.
A recent report from the Royal Institution of Chartered Surveyors (RICS) has unveiled significant upward momentum in the UK housing market, marking a contrast to the downturn observed throughout 2023. As per the findings, there has been a notable increase in sellers entering the market, a phenomenon not seen since autumn 2020. The survey, highlighted by property professionals, demonstrated a net balance of 21% in new instructions to sell, the most robust indicator since October 2020. Additionally, estate agents now report an average of 42 properties per branch, reaching a peak since February 2021.
February saw a steady state in home sales but a rise in buyer inquiries for the second month in a row, indicating a surge of interest among potential buyers. This development aligns with a generally optimistic view for future sales market activity, contrasting sharply with the previous year’s perspectives.
Despite the trend of declining house prices in recent times, there seems to be an emerging stabilization. The lettings market is experiencing an imbalance, with tenant demand on the rise but a shortfall in landlord instructions, leading to projections of increased rents, albeit at a moderated pace.
Looking forward, the housing market is expected to witness further growth in sales activity, although this optimism is cautiously held, contingent on the availability of new market listings and potential shifts in mortgage rates.
In a related update concerning market perceptions, UK estate agents have conveyed a heightened optimism regarding the growth of house prices, with the RICS reporting the highest expectations index since June 2022. This measured optimism coincides with a well-received increase in new instructions to sell, echoing the strongest performance since October 2020. According to Tom Bill of Knight Frank estate agency, this positive market adjustment is partly attributable to a reduction in mortgage rates from the previous summer’s highs. Despite a high base interest rate of 5.25%, signs of recovery are evident, buoyed by anticipations of further improvements in house prices and mortgage approvals.
Moreover, the survey revealed a positive shift in buyer demand, with an upward trend in sales volume when compared to the previous year. RICS chief economist, Simon Rubinsohn, emphasized the burgeoning optimism in the sales market, potentially bolstered by the recent announcement of a reduction in capital gains tax.
Contrastingly, the rental market indicates a slight cooling phase, with a slight decrease in rental price expectations and a reduction in tenant demand from prior peaks. Nevertheless, the ongoing surplus of demand over supply hints at continued pressure on the rental segment, offering little respite for tenants in the foreseeable future.
