"There are positive signs that the property market will strengthen with sales expectations reflecting this optimism."
- Sara Palmer, distribution director at The Mortgage Lender
The RICS Residential Property Survey for January signalled a broadly flat picture for house demand and sales, however, respondents foresee the market picking up later in the year.
The new buyer enquiries indicator returned a net balance of zero, which means that interest in home buying neither increased nor decreased. Agreed sales were up by a net balance of 3%, which RICS describes as "very marginal in terms of growth".
However, the future outlook for sales looks somewhat stronger, with the three-month look ahead for sales giving back a +10% result on balance. The further forward, the more positive things get, with a +30% net balance recorded for twelve months from now.
House prices continue to rise across the country, with +22% net balance responses indicating rises over the month. Northern Ireland and the North West of England are seeing the strongest momentum at present. On the flipside, price growth appears more modest across Yorkshire & the Humber and the South East for the time being. Respondents firmly believe that house prices will continue to rise across the country over the next twelve months (+55%).
Tarrant Parsons, head of market analytics at RICS, said: “The latest survey feedback indicates that growth in buyer demand lost a bit of momentum through the early part of the year, with this flatter picture likely linked to the turbulence seen across money markets in the first half of January.
“Nevertheless, moving forward, respondents continue to envisage a slightly positive near-term outlook for sales activity. This should be further supported by the unwinding of some of the pressures around mortgage interest rates over the past couple of weeks.”
Tomer Aboody, director of MT Finance, commented: “With February's anticipated rate cut coming to fruition, lenders will be cutting their mortgage rates in order to entice new business. A more confident and busy market should follow, as borrowers take advantage of lower mortgage rates and in turn, better affordability.
“Unfortunately, with the end of the stamp duty holiday in sight, any uplift in volumes could be hit just as the market is picking up.”
Sara Palmer, distribution director at The Mortgage Lender (TML), added: “January saw a slower start to the year than expected compared to the previous month, with new buyer enquiries and agreed sales stalling despite house prices continuing to rise steadily. The rush to buy seen in December, particularly from first-time buyers, has now been largely tempered as time starts to run out to complete ahead of the stamp duty relief ending in March. Instead, first-time buyers will likely have settled for building up their finances further in order to be in a position to buy later down the line, without having to make the compromises that may have been necessary to beat the deadline.
“Looking ahead to the spring and beyond, there are positive signs that the property market will strengthen with sales expectations reflecting this optimism. The recent interest rate cut has already prompted major lenders to cut mortgage rates, which no doubt has come as welcome news to mortgage borrowers.”
