In a recent report by the Royal Institution of Chartered Surveyors (RICS), there is encouraging news for both homebuyers and sellers as the UK housing market shows signs of positive momentum.
According to the latest RICS Residential Market Survey, new buyer enquiries experienced a significant uptick, reaching +7% in January among respondents. This marks a notable improvement from the -3% reported in December and represents the highest level since February 2022.
The percentage balance measure for agreed sales has also demonstrated a positive shift, changing from -5% to +5%. Respondents are optimistic about the coming months, with +14% on balance expressing the belief that sales will continue to rise.
The report attributes the rise in sales volumes to the anticipation of future interest rate cuts by the Bank of England, indicating a positive market sentiment among participants.
Looking ahead, a substantial +44% of respondents expressed their belief that sales volumes will increase over the next twelve months, reflecting confidence in the market’s sustained growth.
On the pricing front, near-term expectations at the national level have stabilized, with the net balance moving to -2% from a previous -12%. Looking at a 12-month horizon, a net balance of +18% of respondents now expect a mild increase in house prices, marking the strongest reading since July 2022.
Tarrant Parsons, senior economist for RICS, commented on the positive trend, stating, “The UK housing market has seen a continued improvement in buyer activity through the early part of the year, supported by the recent easing in mortgage interest rates.”
Parsons continued, “Although sales volumes through much of the year ahead are likely to remain relatively subdued compared to the longer-term average, the outlook has now turned modestly brighter on a consistent basis over the past few survey reports.”
However, Parsons also highlighted potential challenges, stating, “Mortgage affordability isn’t still a significant challenge, and any further unwelcome surprises with regards to inflation may still cause interest rate expectations to be revised. That would then pose a significant risk to any prospective recovery in the months ahead, even if the current prognosis is for the market to see a further pick-up in activity levels.”
Commenting on the RICS report, Tom Bill, head of UK residential research at Knight Frank, added his perspective, saying, “Leading indicators of demand have turned more positive, and we expect the number of mortgage approvals and exchanges to catch up this spring.”
Bill concluded, “As inflation falls faster than expected, the improved outlook for rates on money markets means lenders have dropped their prices, irrespective of how cautious the Bank of England is sounding. We expect a 3% rise in UK house prices this year despite the presence of some inflationary pressures and rising political volatility.”