Sales expectations turn slightly positive for the first time this year
The outlook for the UK housing market has improved over the past month, supported by a modest easing in mortgage rates in recent weeks, according to the Royal Institution of Chartered Surveyors (RICS).
Results of the latest RICS UK Residential Market Survey showed a slightly better outlook for market activity going forward, though near-term sales expectations remain only marginally positive and most other indicators remain in negative territory, although less so than in previous months.
The net balance for new buyer enquiries in November came in at -14%, still consistent with a relatively soft trend in buyer demand. However, this represents the least negative figure for this metric since April 2022. At a regional level, feedback regarding new buyer enquiries has become less downbeat across all parts of the UK compared to a few months ago.
For agreed sales, the national net balance of -11% is an improvement from -23%, suggesting a slowdown in the downward trend of sales volumes. The average time taken to finalise a sale has eased back from a peak of 20 weeks in September to around 19 weeks presently.
Near-term sales expectations, meanwhile, posted a first positive reading since early 2022, registering a net balance of +6% in the November RICS survey. However, the expected recovery in sales volumes over the coming three months is relatively modest.
Regarding supply, the flow of new instructions on to the market has remained broadly stable in recent months, with a net balance reading of -5% recorded in both October and November.
Turning to house prices, the survey’s headline gauge posted a net balance of -43% in November, indicating a downward trend. However, this is an improvement from the previous -61%, suggesting a moderation in the pace of house price declines over the last three months.
“With mortgage rates reducing slightly, confidence and affordability are improving,” commented Tomer Aboody, director at property lender MT Finance. “Buyers are looking to take advantage of a recent slower market, which in turn has meant that some sellers are happy to accept a lower price, or at the very least are more open to negotiations.
“An increase in supply is needed next year to further boost the housing market. With this in mind, it could be time for some government intervention, possibly in the form of a stamp duty revamp.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, added that the figures in the latest RICS survey confirm what they had been seeing on the ground.
“Increases in demand confirm buyers are encouraged by recent reductions in inflation and mortgage payments complemented by a growing belief that the worst for house prices may be behind us, or at least not far off,” he said. “Better-than-expected mortgage approval and transaction numbers in October and November, as well as healthy employment and wage growth, are also supporting activity.
“We don’t expect to see much change in the next few months, rather a gradual improvement, particularly as extra optimism always seems to be in evidence at the start of a new year.”
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