Wednesday, February 28, 2024
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Housing market momentum building up, says RICS

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Results of the latest RICS UK Residential Market Survey a positive shift in market activity, indicating improvements over the earlier month

As the trend of decreasing mortgage rates continued, both near term and year ahead sales expectations rose in December, according to the RICS.

Results of the latest RICS UK Residential Market Survey a positive shift in market activity, indicating improvements over the earlier month.

The buyer enquiries indicator in December recorded a reading of -3%, an improvement from November’s -13%, moving towards a neutral reading. This marks the fourth successive month of lower negative buyer enquiry activity, entering neutral territory for the first time since April 2022. Likewise, the newly agreed sales figure of -6% is the least negative since March 2022.

Expectations for near-term sales in December increased to +12%, with respondents expecting a solid recovery in residential sales volumes in 2024. The net balance rose from +24% to +34%, while the average time to complete a sale reduced to 18 weeks, down from 20 weeks in September 2023.

The headline house price gauge posted a reading of -30% in December, suggesting diminishing downward pressure on prices. This is the least negative figure since November 2022, a positive sign for the market, according to RICS.

Near-term price expectations, while slightly negative at -13%, indicate an expected easing in the pace of price drops compared to November’s -23% result. Respondents foresee house prices stabilising at the national level, posting a net balance of zero in December, an improvement from the -10% logged in November.

House price expectations vary across the UK, with respondents from Northern Ireland, the North West of England, and Scotland expecting higher prices on a 12-month view.

With 2023 proving to be a specifically challenging year for the UK housing market, it seems recent weeks have seen a little bit of respite emerge, Tarrant Parsons, RICS senior economist, noted. Supported by a decline in mortgage interest rates of late, buyer demand has now stabilised, and this is expected to translate into a slight recovery in residential sales volumes over the coming months.

Parsons added: However, the lending climate is set to remain restrictive compared to much of the post global financial crisis era next year, meaning any increase in activity is likely to be limited for the time being.

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