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UK Housing market shows signs of recovery, according to latest RICS survey

UK Housing Market Shows Signs of Recovery, According to Latest RICS Survey

The latest RICS UK Residential Market Survey indicates a positive shift in the housing market, with several key metrics showing signs of improvement. The survey, covering January 2024, highlights a rise in buyer demand, agreed sales, and sales expectations, signalling a potential uplift in the market after periods of decline.

For the first time since February 2022, new buyer enquiries increased to +7% in January, up from -3% the previous month. This resurgence in buyer interest is paired with a positive change in agreed sales, which moved up to +5% from -5%. These indicators suggest a cautious but steady recovery in market activity.

Looking ahead, the survey reveals an optimistic outlook, with sales expected to increase in both the short and long term. Over the next three months, +14% of respondents anticipate a rise in sales, while +44% forecast growth over the next twelve months. This optimism is attributed to the anticipation of future interest rate cuts by the Bank of England, which could ease mortgage affordability challenges and stimulate further market activity.

Despite the overall positive momentum, house prices continue to face downward pressure, with a national level result of -18%. However, this figure represents an improvement and the strongest reading since October 2022, suggesting that the pace of price declines is easing. Notably, London has shown a more stable price trend, with similar observations in Scotland and the North West of England.

The lettings market also experienced changes, with a +28% increase in tenant demand over the past three months, albeit at a slower pace than in previous years. A continuous decline in new landlord instructions contributes to a persistent supply-demand imbalance, expected to push rental prices higher in the coming months, although at a slightly moderated rate.

Tarrant Parsons, RICS Senior Economist, commented on the findings, stating, "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." Parsons also highlighted the lingering challenges of mortgage affordability and the potential impact of inflation on interest rate expectations, cautioning that these factors could pose risks to the market's recovery.

The January 2024 RICS UK Residential Market Survey paints a picture of a housing market on the mend, buoyed by improved buyer interest and sales expectations. However, the recovery remains delicate, with affordability issues and economic uncertainties still looming over the horizon.


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