RICS: Buyer demand strongest since February 2022
The property market has seen the strongest buyer demand since February 2022, after enquiries increased 7 per cent in January.
According to the January 2024 Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey, the outlook for sales volumes over the next twelve months has improved, influenced by expectations of future interest rate cuts by the Bank of England.
RICS says nationally, new buyer enquiries were at +7% in January, up from -3% in December. This result is consistent with a gradual recovery for buyer demand, and while relatively modest, it is the strongest demand since February 2022.
Further, agreed sales also saw a rise in sentiment, tilting positive from -5% previously to +5%. Even more encouragingly, respondents see sales picking up over the next three months, with +14% on balance stating that they believe rises are coming. In the long term, the positivity increases by +44%, believing sales volumes will increase over the next twelve months.
- Results for buyer demand, agreed sales, and new instructions all move out of the negative territory.
- Sales expectations improve further at the three and twelve-month time horizons
- House price declines continue to ease, with London seeing a largely stable trend emerge.
The RICS market survey also says house prices at a national level returned a result of -18%, indicating continuing price falls overall. However, this result has strengthened for five successive months and has been the strongest reading since October 2022. London stands out as exhibiting a more stable trend for prices this month. Likewise, respondents from Scotland and the North West of England cited a generally flat picture in recent months.
In the lettings market, +28% of contributors to the survey reported seeing an increase in tenant demand in the three months to January. It said: "This rise was the most modest since January 2021. In parallel, respondents again noted a decline in the volume of new landlord instructions, with the net balance remaining at -18% for a second consecutive quarter.
"The imbalance between supply and demand is still expected to drive rental prices higher over the coming months, albeit the figure for this eased a touch to +41% - down from readings of +52% and +61% in the two previous quarters."
RICS Senior Economist Tarrant Parsons said: “The UK housing market has seen a continued improvement in buyer activity through the early part of the year, supported by the recent easing in mortgage interest rates. Although sales volumes through much of the year ahead are likely to remain relatively subdued compared to the longer-term average, the outlook has now turned modestly brighter on a consistent basis over the past few survey reports.
“However, this is not to say that mortgage affordability isn’t still a significant challenge, and any further unwelcome surprises with regards to inflation may still cause interest rate expectations to be revised. That would then pose a significant risk to any prospective recovery in the months ahead, even if the current prognosis is for the market to see a further pick-up in activity levels.”
Source: Royal Institution of Chartered Surveyors UK Residential Market Survey
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