The latest RICS Residential Survey for November 2024 reports a resilient UK housing market, with national house price growth continuing to strengthen and buyer demand maintaining an upward trend.
Despite higher mortgage interest rates, the near-term outlook for market activity remains relatively positive.
The survey’s national house price indicator, in terms of net balance, posted a figure of +25% in November, up from +16% in October.
This marks the fourth consecutive monthly increase, further cementing the upward trajectory of house price growth observed since the summer.
ROBUST OUTLOOK
Respondents also expect house prices to continue rising over the next three and 12 months, reflecting a robust outlook for the year ahead.
New buyer enquiries maintained positive momentum, recording a net balance of +12%; largely unchanged from the previous month and highlighting a modest but sustained recovery in buyer demand.
However, agreed sales volumes remained broadly flat, with a net balance of +1% compared to +8% last time round.
Looking ahead, a net balance of 19% of respondents anticipate an increase in sales activity over the next three months, although this figure is more moderate than last month’s reading.
NEW INSTRUCTIONS
Supply-side trends were also positive, with new instructions rising for the fifth consecutive month, as evidenced by a net balance of +17%.
Nevertheless, market appraisals in November were on par with levels seen a year ago, which could signal a potential slowdown in the pipeline of new listings as we move into 2025.
TENANT DEMAND
Looking across to the lettings market, tenant demand declined slightly in November, with a net balance of –1%, marking the first decline since 2020. This reduction may reflect seasonal factors, as the monthly November lettings dataset is not seasonally adjusted.
Meanwhile, landlord instructions continued to fall, with a net balance of –13%, contributing to the ongoing imbalance between supply and demand in the rental sector.
Despite the slower demand backdrop, rental prices are forecast to edge higher, with a net balance of +29% of respondents expecting increases in the near term.
ADDITIONAL HEADWINDS
Tarrant Parsons, RICS Senior Economist, says: “Although the latest survey results continue to signal a steady improvement in buyer demand across the residential market, the broader macro environment is likely to pose additional headwinds moving forward.
“Most significantly, the recent rise in mortgage interest rates may curtail the recovery in market activity before long, and this is reflected in the slightly less optimistic sales expectations data coming through this month.
“Moreover, measures of consumer and business confidence across the economy have deteriorated of late and, if sustained, this could begin to feed through into housing market conditions in the months ahead.”
SOMEWHAT ARTIFICIAL
Tom Bill, Head of UK Residential Research at Knight Frank, says: “Current UK housing market data feels somewhat artificial.
“Demand is being boosted by sub-4% mortgage deals that are no longer available and some buyers are acting ahead of a stamp duty hike in April.
“Following the increase in government spending announced in the Budget, we recently revised down our UK house price forecasts to reflect the risk that inflation and mortgage rates will stay higher for longer.
“House price growth and transaction activity will feel more sustainable once the economy is heading decisively in the right direction.”
