RICS survey highlights improvements in key metrics
The UK housing market has continued to show signs of recovery, with metrics on buyer demand, agreed sales, and new instructions all moving out of negative territory in the latest RICS Residential Market Survey.
The outlook for sales volumes in the next 12 months has also improved, driven by anticipations of forthcoming interest rate cuts by the Bank of England.
On a national scale, new buyer enquiries stood at +7% in January, up from -3% in December. This, RICS noted, signifies a gradual recovery in buyer demand, marking the strongest demand since February 2022, albeit relatively modest.
Agreed sales also witnessed a positive shift from -5% to +5% in sentiment. Respondents in the RICS survey expect an uptick in sales over the next three months, with +14% expecting rises. Looking ahead, optimism extends with +44% believing in increased sales volumes in the next 12 months.
Meanwhile, national house prices returned a figure of -18%, indicating an ongoing overall decline in prices. However, this figure has increased for five consecutive months, marking the most robust reading since October 2022.
In the lettings market, +28% of contributors reported an upturn in tenant demand in the three months to January, marking the most modest rise since January 2021. However, respondents observed a decrease in the volume of new landlord instructions, with the net balance remaining at -18% for a second consecutive quarter.
The continuing mismatch between supply and demand is expected to drive rental prices higher in the coming months, though the figure slightly eased to +41%, down from readings of +52% and +61% in the two preceding quarters.
“The UK housing market has seen continued improvement in buyer activity through the early part of the year, supported by the recent easing in mortgage interest rates,” said Tarrant Parsons, senior economist at RICS. “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, this is not to say that 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.”
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