The UK’s housing market is buzzing with activity, showcasing signs of recovery and optimism. According to the latest report from the Royal Institution of Chartered Surveyors (RICS), the property sector is experiencing an upward trajectory in house sales, buoyed by a resurgence in buyer interest and an increase in new listings.
Buyer Enthusiasm and Market Recovery
For two consecutive months, new buyer enquiries have shown a positive trend, marking a net balance of +6%. This indicates a growing demand among buyers, a trend that’s expected to persist despite a potential plateau in mortgage rates. Across the UK, the revival of buyer interest has been noticeable, with most regions witnessing a rebound in the past two months.
Though agreed sales in February saw a slight dip (a net balance of -3%), this represents a significant improvement compared to the trend over the last year, where the average net balance languished at -22%. This suggests a slow but steady recovery in sales activities.
Future Outlook
Looking ahead, the sentiment in the housing market is decidedly optimistic. Sales activity is anticipated to pick up further momentum over the next year, with a robust net balance of +42% of respondents predicting an increase. This optimism is uniform across all UK regions, with an expectation of enhanced residential sales activity over the longer term.
A pivotal development in February was the surge in new instructions to sell, the strongest since October 2020, signaling a potential shift towards a more dynamic market. Estate agents now boast an average stock level of 42 properties, the highest since February 2021, thanks to an uptick in market appraisals.
Pricing Trends and Lettings Market
While house prices continue to show a downward trend on a national level, the decline is stabilising, with the latest figures indicating the smallest drop since October 2022. In London, the price recovery is even more pronounced, with expectations of growth in house prices across England and Wales within the next twelve months.
The lettings market, however, paints a different picture. Although tenant demand persists, the pace of growth has moderated. With a continuing decrease in landlord instructions, rental prices are expected to rise, albeit at a slower rate.
Expert Insights
Simon Rubinsohn, chief economist at RICS, highlights the sales market’s positive trajectory, emphasising the role of new stock in sustaining this momentum. The government’s recent changes to Capital Gains Tax (CGT) could further invigorate the market, especially in light of new builds likely remaining limited.
Tom Bill, head of UK residential research at Knight Frank, points to the inverse relationship between economic fluctuations and mortgage rates as a beacon of hope for the housing market. He advises keen observation of employment trends for those looking to navigate the property market this year.
The chancellor’s move to cut CGT on residential property aims to stimulate the market by encouraging landlord sales, a strategy that may inadvertently apply upward pressure on rental prices due to a decreased number of available rental properties.