But lettings market continues to face challenges…
The UK housing market continued to show signs of recovery in September, with demand, sales, and new listings all increasing, according to the Royal Institution of Chartered Surveyors (RICS).
Its latest Residential Market Survey also showed that national house prices have grown for the first time since October 2022, contributing to an overall positive outlook for the market.
The survey recorded a net balance of +14% for buyer demand, marking the third consecutive month of growth. Sales sentiment also saw a modest increase, with a net balance of +5%.
Looking ahead, 23% of respondents expect the sales market to continue growing over the next three months, with even stronger optimism for the next year, with a net balance of +45%.
New listings rose to a net balance of +22%, up from +9% in August, with respondents attributing the rise partly to concerns over potential Capital Gains Tax (CGT) increases, which may be prompting homeowners to list their properties for sale.
Nationally, house prices are rising for the first time in nearly two years, with a net balance of +16% in September, up from 0% in August. However, the growth is uneven, with regions such as the West Midlands, South West, and East Anglia seeing less of an increase.
Tarrant Parsons (pictured left), RICS head of market analytics, highlighted the impact of lower mortgage rates on housing activity.
“The recent easing in mortgage interest rates continues to support a recovery in buyer demand,” Parsons said, adding that further reductions in monetary policy could create a more favourable environment for the housing market in the coming months.
Tomer Aboody (pictured centre), director at specialist lender MT Finance, echoed the positive sentiment.
“With lower rates and potentially a further cut in base rate on the way, buyers are feeling more confident about taking the plunge,” he said.
The lettings market, meanwhile, continues to face challenges. Tenant demand grew by +22% in September, while the supply of rental properties fell by -29%, continuing a trend of supply shortages. Some landlords are selling properties, likely in anticipation of CGT hikes, exacerbating the imbalance between rental demand and supply. As a result, renters may face further rent increases and difficulty finding properties.
The more optimistic sentiment in the housing market could be tied to recent interest rate cuts by the Bank of England, with expectations of further reductions in the coming months. However, the squeeze on the rental market persists, partly due to the shift of rental properties into the sales market.
“RICS survey results continue to highlight the pressures on renters, with demand consistently outstripping supply,” said RICS president Tina Paillet (pictured right). “While the Renter’s Rights Bill aims to improve standards and offer better protections for tenants, we must ensure that these reforms do not discourage responsible landlords from remaining in the market.”
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