UK house prices are poised for a comeback, signalling good news for homeowners and potential buyers alike. After a period marked by declining prices due to rising interest rates and a cost-of-living squeeze, the latest industry poll from the Royal Institution of Chartered Surveyors (RICS) brings a ray of hope, indicating a potential uptick in property values within the next year.
A Glimpse of Stability
RICS’s most recent monthly review has shown a stabilising trend in property prices as of March, halting the previous months’ downward trajectory. This stabilisation comes in the wake of increased property listings and a surge in buyer interest, painting a more optimistic picture of the UK’s housing market future.
Tarrant Parsons, RICS’s senior economist, shared insights from the March survey, highlighting a gradual recovery in demand across the UK housing landscape. For the third consecutive month, there’s been an upswing in new buyer inquiries, suggesting a renewed confidence among potential homeowners.
Interest Rates and Market Recovery
The easing inflation situation has fueled expectations that the Bank of England might start to lower interest rates later this year. While near-term sales forecasts indicate a brighter outlook, the market’s pace of acceleration could remain modest. Mortgage rates, although not expected to hit the record lows of 2020 and 2021, are likely to stabilise, further encouraging market activity.
March saw a notable increase in buyer demand, with a net balance of +8% of survey respondents reporting a rise in new buyer inquiries—the most significant jump since February 2022. Additionally, the influx of new property listings for the fourth month in a row, with a +13% net balance noticing a rise in March, suggests a healthier supply meeting the growing demand.
Comparing Market Indicators
RICS’s survey isn’t the only barometer of the housing market’s health. Other reports, like those from Halifax and Nationwide, noted a decrease in house prices in March compared to February. However, these drops appear to be part of a stabilising trend rather than an ongoing decline, with official statistics showing that the fall in UK house prices has been halting since July 2023.