Buyer enquiries and listings heading upwards has created a more upbeat picture for sales as house stabilise and 12-month predictions show a return to growth, the RICS UK Residential Survey reveals.
And although average stock levels on estate agents books now sit at 42 properties – the highest since February 2021 – concerns over the future direction of mortgage rates and the Bank of England’s interest rate decision next Thursday is likely stalling the market.
RICS’ latest data shows new buyer enquiries positive for the second successive month (+6% net balance) and an upwards trend in buyer demand with most regions across the UK now shown a recovery in buyer interest.
Agreed sales were flat in February (-3% net balance) and although this is less positive than in January RICS says that it still signals a stronger trend in sales.
Meanwhile in the lettings market, tenant demand continues to rise although landlord instructions are still dwindling pointing to higher rents still to come.
Simon Rubinsohn, RICSSimon Rubinsohn, RICS Chief Economist, says: “Whether the increase in stock coming back to the market will be sustained is likely to be a critical factor in explaining how things play out over the balance of the year especially with new build likely to remain constrained.
“Significantly, the rise in the number of appraisals taking place points in the right direction. And the government will be hoping that this trend is given a boost by the change to CGT announced in the Budget.”
And he adds: “There are signs that the relentless upward trend in private rents is losing momentum but fresh demand is still comfortably outstripping supply in this area which suggests there is unlikely to any significant relief for tenants.”
Across the UK agents views are somewhat mixed.
Tom Bill, Knight FrankTom Bill, Head of UK Residential Research at Knight Frank, says: “The economic data has fluctuated since Christmas but the direction of travel for the housing market is up as mortgage rates ultimately head in the opposite direction.
“Ironically, recent weakness in the jobs market is a positive sign for buyers and sellers as pressure on the Bank grows to cut rates sooner rather than later, leading to more mortgages starting with a 3. For anyone in the property market trying to time their decision, they would be well-advised to follow employment trends closely this year.”
And he adds: “The Chancellor cut capital gains tax on residential property in an attempt to free up houses by encouraging more landlords to sell, and some may do just that after a series of financial disincentives in recent years. However, politics once again trumped economics in the housing market as fewer rental properties means more upwards pressure on rents.”
BUYING FRENZY
Neil Foster, Hadrian Property PartnersNeil Foster, Partner at Hexham-based Hadrian Property Partners, says: “The buying frenzy appears to have abated but the market remains starved of good quality stock with too many potential vendors unwilling to enter the ring until stock levels show signs of improving. The perfect storm for the market, albeit with little affect (so far) on prices.”
Ben Waites, Walker SingletonBen Waites, Director at Walker Singleton in Halifax, says: “The sales market is still buoyant, although lack of new build homes is still impacting on the general market. Many larger homes are underoccupied, with owners unable to find suitable, modern, energy efficient homes and accessible homes to move to.”
In Market Harborough, Peter Buckingham, an Estate Agent at Andrew Granger & Co, says: “The market is showing signs of recovery as activity improves as we head towards the traditionally busy Spring period.
Peter Buckingham, Andrew Granger & Co“The recent budget seems to have given buyers an air of confidence to consider returning to the marketplace, albeit with some caution.
And Christopher Clark, Chartered Surveyor at Ely Langley Greig in Eastleigh, says: “The residential market is slowly recovering with increased sales. It’s too early to see any evidence of higher prices being paid but providing there are no unexpected shocks lurking around the corner we may see some improvement in values during the next quarter.”
Jeff Cole, Cole Rayment & WhiteJeff Cole, Partner at Wadebridge-based Cole Rayment & White, says: “The market is messy with more fall throughs than usual.
“Chains are a problem with valuers and buyers being more cautious generally. However still a good level of viewings and with Spring we expect a better time as and when the weather picks up.”
Melfyn Williams, Williams & GoodwinMeanwhile Melfyn Williams, Director of Williams & Goodwin The Property People in Anglesey, says: “The current housing market presents an interesting landscape. It’s a market that rewards precision in pricing and patience from sellers. However, it’s not
all doom and gloom. With interest rates seemingly reaching their peak, we’re starting to see a gradual return of confidence in the market.”
Charlie Barrett, DM HallAnd Charlie Barrett, Associate at DM Hall Chartered Surveyors, in Edinburgh, says: “A busy January has hopefully kick started the Edinburgh and Midlothian market, following a typically slow December.
“Things will hopefully continue steadily into the traditionally much busier spring period. Activity is expected to increase but as always, interest rates will affect market sentiment.
