"With more properties coming onto the market, we are seeing some confidence creep back as sellers feel the time is right to list."
- Tomer Aboody, director of MT Finance
The residential housing market is seeing a "slightly more upbeat picture" for sales market activity than was the case throughout much of last year, according to the latest RICS UK Residential Survey results for February.
However, RICS says the near-term outlook is still somewhat cautious reflecting, in part, the suspicion that the recent easing in mortgage rates is likely to stall on the back of ongoing uncertainty about the timing and speed of interest rate reductions.
At a headline level, the new buyer enquiries indicator posted a net balance reading of +6% in February (identical to last month’s figure). This marks the second successive reading in positive territory, continuing to signal an upward trend in buyer demand. When disaggregated, most parts of the UK have seen a recovery in buyer enquiries over the past two months.
Looking at the agreed sales series, February saw a net balance reading -3% returned. Although the latest result is a little softer than that recorded in the previous iteration of the survey (+4%), both readings are indicative of a stronger trend in sales volumes than was evident through much of the past twelve months. The average net balance for this metric is -22% when looking back over the past year.
Going forward, near-term sales expectations are marginally positive, posting a net balance of +6%. While this is slightly more modest than the figure of +12% seen last time, sales activity is still anticipated to gain further momentum over the coming year (net balance +42%). Moreover, respondents across all UK regions/countries foresee residential sales activity picking up over the longer-term time horizon.
One of the more noteworthy developments to come through in the February survey was a solid rise being reported in new instructions to sell. The latest net balance of +21% represents the strongest reading since October 2020, standing in stark contrast to the continuously negative picture cited throughout 2023. In keeping with this, average stock levels on estate agents books now sit at 42 properties, the highest since February 2021 (albeit this number remains low on a longer-term comparison). Furthermore, respondents noted an increase in the number of market appraisals undertaken over the month, relative to the same period last year, suggesting more supply may become available on the market going forward.
With respect to the survey’s gauge of headline house prices, the latest net balance of -10% points to the downward trend evident over the past year more or less stabilising. In fact, the February reading is the least negative figure since October 2022, having been as low as -67% in September last year. In London, the turnaround in the price indicator is slightly more pronounced with this measure across the capital rising from -68% in September 2023 to stand at +5% in February. Looking ahead, a net balance of +36% of respondents across England and Wales now envisage house prices returning to growth at the twelve-month time horizon, up from a reading of +18% last month.
Jeremy Leaf, north London estate agent and former RICS residential chairman, commented: “The findings of the latest RICS survey chime with some of the other ‘push-me-pull-you’ reports seen recently. One month up a bit, the next down a bit – it’s a pattern likely to be repeated over the next few months.
“In our offices, we noticed considerable hesitation among buyers and sellers as the Budget approached. Many were hoping for a few goodies to be thrown their way, which would have made the whole process more financially attractive. However, the Budget has been and gone with precious little to incentivise as the Chancellor probably hopes that growing optimism means he had no reason to further stoke demand.
“However, lingering economic worries and more property choice means the market remains sensitive with only competitively-priced properties attracting attention.”
Tomer Aboody, director of MT Finance, added: "With more properties coming onto the market, we are seeing some confidence creep back as sellers feel the time is right to list.
"As rates begin to stabilise and even reduce, buyers are prioritising their purchase once more. Increased stock levels are giving them more options, which in return should keep prices in check and ensure they don’t rise too steeply.
"With further indications that the economy is getting back on track, we expect a big push from the government before the election, perhaps with a reduction in stamp duty, along with falling interest rates.”
