The UK housing market closed 2024 with a robust performance, showing positive trends in sales, buyer activity, and house prices, according to the December 2024 RICS UK Residential Property Survey.
The survey revealed continued growth in house sales, with 5% of respondents reporting an increase in new buyer enquiries in December. While this marks a slowdown from the 11% growth seen in October and November, sales volumes rose, with 7% of respondents reporting an increase, compared to just 1% in November.
New property listings also surged, with a net balance of 14% reporting an uptick in new instructions. This marks the sixth consecutive month of rising listings, attributed in part to changes in stamp duty earlier in the year.
House prices are now rising across all UK regions, with Northern Ireland and Scotland leading in growth.
RENTAL CHALLENGES
In the rental sector, tenant demand has stabilized, but supply constraints continue to push rents higher. A net balance of 37% of respondents expect further rent increases. Many landlords are selling properties, contributing to the supply shortage.
While the market remains buoyant, concerns linger over rising gilt yields and their potential to drive up borrowing costs. Despite this, respondents to the survey are optimistic about the medium-term outlook.
FURTHER IMPROVEMENT
Simon Rubinsohn, RICS Chief Economist, says: “The latest results from the RICS Residential Market Survey point to a further improvement in sentiment in the housing market despite concerns about the potential impact of rising bond yields on borrowing costs.
“Buyer enquiries rose once again, albeit at a slower pace than in November, and the headline price indicator also moved higher.”
However, Rubinsohn cautioned that rising mortgage rates could test the market’s resilience, posing challenges for buyers and developers alike. Developers, in particular, face pressure to meet the government’s target of building 1.5 million homes during this parliament.
MORE PROPERTY CHOICE
Jeremy Leaf, north London estate agent and a former RICS Residential Chairman, says: “As far as sales are concerned, these historically-reliable figures confirm what we’re seeing at the sharp end.
“Despite continuing worries about the cost of living and seemingly slowing pace of mortgage rate cuts, buyers are taking advantage of more property choice while sellers try to attract those wanting to move before higher stamp duty charges apply in April.
“However, overall caution remains so there are more viewings before offers are submitted and transaction times are lengthening.
“Hopefully, the Bank of England follow the government’s current mantra of trying to boost growth and cut interest rates soon, which will inevitably improve housing market activity rather than keeping rates higher to control inflation.”
LANDLORDS LEAVING
But he adds: “On the lettings side, we are finding landlords still leaving the market when tenancies end due to concerns about the consequences of the soon-to-be introduced Renters’ Rights Bill which will make it harder to remove disruptive or non-rent paying tenants.
“Some rents rose so far and fast at the beginning of last year that we are often struggling to match those figures when the same properties become available now.
“Nevertheless, shortage of stock, particularly of smaller one- and two-bedroom flats, has kept rents higher than they might have been – a trend which is likely to continue for the next few months at least.”
BIG PUSH
Tomer Aboody, director of specialist lender MT Finance, says: “2024 saw a positive end to the year with more property transactions, along with an increase in pricing, illustrating how buyers and sellers are keen to take advantage of lower borrowing rates on offer.
“As the new year gets underway, an imminent reduction in interest rates is looking less likely.
“We are therefore likely to see a big push in activity in the first quarter as buyers take advantage of cheaper stamp duty and current lower rates, rather than put plans on hold yet again in the hope of further reductions which may not materialise for a while.”
