The UK housing market, which has been under a cloud of uncertainty, is finally showing signs of improvement. According to a recent survey by the Royal Institution of Chartered Surveyors (RICS), there’s been a positive shift in the market. For the first time since early 2022, sales expectations are on the rise. This uplift in November marked a significant change from the previous month’s outlook.

Key Findings from the RICS Survey

• Rising Sales Expectations: The forecast for sales over the next three months has jumped to a positive six in November, a stark contrast to the minus 17 recorded in October. This is the first positive reading since April 2022.
• Methodology: The survey calculates the difference between the percentage of UK surveyors reporting increases and decreases in home sales.
• Anticipations of Continued Improvement: The data indicates that the market improvements, reflected in growing house prices and mortgage approvals, are likely to continue as mortgage rates decline further from their summer peak.

Interest Rates and Mortgage Developments

Bank of England’s Stance

The report came just before the Bank of England’s Monetary Policy Committee’s decision, which was expected to maintain interest rates at a 15-year high of 5.25 percent. However, there’s a growing belief that the peak of interest rates has been reached, leading to more competitive mortgage products entering the market.

Mortgage Rates Trend

• Two-Year Fixed Mortgage Rates: There’s been a decline from 6.2 percent in July to 5.5 percent in October for mortgages with a 60 percent loan-to-value ratio.
• Five-Year Deals: Rates on these mortgages have also decreased since the summer.

Experts suggest that the market boost is largely due to the anticipation of further drops in interest rates.

Estate Agents’ Outlook

Estate agents are showing a more optimistic stance regarding the housing market:

• Sales Expectations: There’s been a significant rise to 24 in November from zero in the previous month.
• House Price Assessment: Despite remaining negative at minus 43 over the past three months, this is an improvement from October’s minus 61.
• Year-Ahead House Price Expectations: These have also risen to minus 10 in November, up from minus 43 the previous month.

Rental Market Trends

The rental market, which has seen a surge in prices due to high demand from those unable to afford mortgages, is also showing signs of stabilisation:

• Tenant Demand and Price Expectations: Both are reported to be reducing.
• New Landlords’ Instructions: However, the number of instructions to agents continues to decline.

Mortgage Arrears A Concern

Separate data revealed an increase in mortgage arrears to the highest rate in six years as of September, reflecting the impact of higher interest rates on household finances.

Conclusion

With improved confidence in the market, thanks to the anticipation of stabilised interest rates and more competitive mortgage options, the UK housing market is heading towards a brighter period. This is a welcome change for buyers, sellers, and the industry as a whole.