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0:05 AM, 8th February 2024, About 3 months ago
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The UK housing market showed further signs of recovery in January 2024, according to the latest survey by the Royal Institution of Chartered Surveyors (RICS).
The survey, which covers various aspects of the residential market, revealed that all key indicators improved in the first month of the year.
However, the survey also indicated that the growth of rental prices slowed down, as tenant demand increased at a lower rate than before, while landlord supply decreased.
RICS says that 28% more surveyors reported a rise in tenant demand than a fall in the three months to January.
This was the lowest figure since January 2021, suggesting a cooling of the rental market.
Meanwhile, the number of surveyors who reported a drop in new landlord instructions outnumbered those who reported a rise by 18%.
This was unchanged from the previous quarter, indicating a persistent shortage of rental properties.
As a result of this mismatch between demand and supply, surveyors expected rents to increase soon, but at a slower pace than before.
The net balance of surveyors who anticipated higher rents fell to 41%, down from 52% in the previous quarter and 61% in the quarter before that.
RICS is also predicting that sales volumes will improve this year, thanks to the anticipated lower interest rates from the Bank of England.
Across the country, more buyers showed interest in January, with a +7% increase from -3% in December.
This shows a slow but steady improvement in buyer demand, reaching the highest level since February 2022.
In addition, agreed sales improved from -5% to +5%, reflecting a more positive mood.
Tarrant Parsons, RICS’ senior economist, 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.”
He added: “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.”
Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “This is the first glimpse of buyer enthusiasm we’ve seen in this report for ages, and it’s enormously welcome.
“Miserable levels of demand have been a permanent feature for the best part of two years, so this is a real departure.
“More positive sentiment has helped to boost the number of agreed sales, which is music to the ears of those who have been struggling to shift their home.”
She added: “It has inspired a good degree of optimism among estate agents, who are now more convinced that sales are set to pick up over the coming months.
“They’re hopeful that falling mortgage rates will fuel growth in the property market, and the worst may be over. They’re also expecting modest price rises this year.
“However, estate agents are optimistic individuals generally when it comes to house prices, so we shouldn’t set too much store by this.”
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