Sales market activity appears to have levelled-off although house prices are continuing to rise steadily across the UK, the RICS UK Residential Survey January 2025 reveals.
The Survey signalled a broadly flat picture for house demand and sales although respondents foresee the market picking up later in the year.
The new buyer enquiries indicator returned a net balance of zero, which means that interest in home buying neither increased nor decreased. Agreed sales were up by a net balance of +3%.
The future outlook for sales looks somewhat stronger, with the three-month look ahead for sales giving back a +10% result on balance.
POSITIVE OUTLOOK
Indeed, the further you look forward, the more positive things get – +30% net balance is recorded for twelve months from now.
House prices continue to rise across the country, with +22% net balance responses indicating rises over the month.
Northern Ireland and the North West of England are seeing the strongest momentum at present. On the flipside, price growth appears more modest across Yorkshire & the Humber and the South East for the time being. Respondents firmly believe that house prices will continue to rise across the country over the nex 12 months (+55%).
FALTERING LETTINGS
In the lettings market, demand continued to falter with a +2% result, indicating marginal growth, very close to a flat picture.
On the other hand, landlord instructions, which is to say landlords making property available for rent continued to reduce (net balance -19%).
So despite demand recording broadly flat to marginal growth, further reductions in availability continues to increase the gap between supply and demand.
Unsurprisingly, a net balance of +23% believe that rents will continue to rise over the next three months.
MONEY MARKET WOES
Tarrant Parsons, RICS Head of Market Analytics, says: “The latest survey feedback indicates that growth in buyer demand lost a bit of momentum through the early part of the year, with this flatter picture likely linked to the turbulence seen across money markets in the first half of January.
“Nevertheless, moving forward, respondents continue to envisage a slightly positive near-term outlook for sales activity.
“This should be further supported by the unwinding of some of the pressures around mortgage interest rates over the past couple of weeks.”
ELEPHANT IN THE ROOM
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “In our offices, demand, listings, sales agreed and prices continued an upwards, but slower-than-expected trend in January.
“However, affordability is still the elephant in the room, resulting in buyer caution, sensitive pricing and protracted negotiations. Many buyers and sellers have been awaiting a further rate cut, which came earlier this month, and are hoping that this will result in lower rates.
“As far as lettings are concerned, many tenants are trying as hard as possible to take advantage of an improved bargaining position. However, lack of stock is helping underpin rents through demand for smaller flats in particular has continued unabated.”
BETTER MORTGAGE RATES
Tomer Aboody, director of specialist lender MT Finance, adds: “With February’s anticipated rate cut coming to fruition, lenders will be cutting their mortgage rates in order to entice new business.
“A more confident and busy market should follow, as borrowers take advantage of lower mortgage rates and in turn, better affordability.
“Unfortunately, with the end of the stamp duty holiday in sight, any uplift in volumes could be hit just as the market is picking up.”
