By The new survey can be found here, and in summary:
- Survey results predicting further bounce in housing market in both the near and longer term
- New property listings increase for a fourth month with buyer demand also rising
- The battle between tenant demand and lack of available rental properties continues, with rental prices expected to rise in the coming months
The latest RICS UK Residential Survey results (March 2024) show a steady improvement in sentiment, with buyer demand and sales expectations going forward seeing a rise in positivity. Meanwhile, stability in house prices has also been reported.
According to the survey, buyer demand has continued to rise, with a net balance of +8% of respondents citing an increase in new buyer enquiries during March, making this the most positive result since February 2022.
On the property supply front, the flow of new listings coming onto the sales market increased for a fourth successive month, with a net balance of +13% of respondents noticing a pick-up in new instructions in March.
Looking at expectations, respondents predict further improvement in activity over the coming months, with a net balance of +13% of respondents predicting sales volumes rising in the next three months, compared to a reading of +6% previously.
Similarly, looking ahead to the next twelve-months, a net balance of +46% of respondents predict sales activity rising (up from +42% in February).
Interestingly, house price trends have grown less negative for the seventh month in a row, rising from a net balance of -67% in September 2023 to -4% in March. This suggests a stable picture is now in place for house prices across the UK.
Moving across to the lettings market, the question relating to tenant demand remained modestly positive in March, at a net balance of +19 (+16 last time round). On the opposite side, landlord instructions once again show a weak net balance reading of -19. Consequently, +34% of survey respondents still expect rental prices to rise in the next three months.
Last week, the UK government’s ‘Levelling Up, Housing and Communities (LUHC) Committee’ announced the launch of an inquiry into the home buying and selling process, which will look at if the current processes are fit for purpose and what can be done to make improvements.
RICS Senior Public Affairs Officer, Sam Rees, commented: “As the activity in the housing market increases, we welcome the inquiry into how the home buying process can be improved for consumers.
“RICS members working as agents and surveyors play a vital part in providing professional advice, ensuring that consumers are well informed on what for many is the most expensive purchase they will make. Their expertise will help shape the RICS recommendations and evidence to the inquiry committee this month.
“As a founding member of the Digital Property Market Steering Group, we are already working across the sector to identify ways that consumers and industry professionals can have access to the necessary information needed to buy and sell a home, reducing fall throughs and transaction times.”
Tarrant Parsons, Senior Economist, RICS, comments:
“Demand continues to recover gradually across the UK housing market, with new buyer enquiries rising for a third month in succession according to the latest survey feedback.
“With the inflation backdrop turning a little less difficult of late, this has led to expectations that the Bank of England will be able to start lowering interest rates later in the year. This should continue to support the market to a certain degree going forward.
“In keeping with this, near-term sales expectations point to an improving outlook, albeit the scope for an acceleration in activity will still be relatively limited given mortgage rates are set to remain much higher than in 2020/21”.
Tomer Aboody, director of property lender MT Finance, says: “With more stock coming to the market as confidence increases, we are seeing further buyer demand, taking advantage of consistent interest rates and lower inflation.
“With expectations of a reduction in interest rate growing all the time and more stock expected to be launched this spring, this positive sentiment is likely to continue, even as a general election looms on the horizon.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Buyers and sellers are emerging from an extended hibernation, which resulted in a subdued market for much of last year. Better weather is coinciding with much more interest than we have seen for several months.
“However, the increased choice of properties is making it more difficult for buyers to make up their minds as they worry about missing out on an alternative. As a result, decision-making is more protracted and bargaining is harder so sales are taking longer. Prices are firming up but concerns about affordability are keeping a lid on sellers who think that more viewings will lead to much higher values.
“On the lettings side, affordability constraints are certainly playing their part with the pressure for higher rents building as supply is still not keeping up with demand. However, the quality of interest remains low, resulting in considerable additional checks to ensure tenants can pay their way for the length of the tenancy at least.
“Gently rising rents are the likely outcome and certainly the sharp increases seen last year are probably a thing of the past for the next few months at least.”
Daniel Austin, CEO and co-founder at ASK Partners, said: “The property sector is in recovery as the outlook has considerably improved. Rent values have seen sustained growth, positioning real estate as reasonably valued in comparison to gilts and presenting growth potential. In the realm of commercial real estate, factors like physical condition, location, and age significantly influence a property’s value. Well-maintained properties boasting modern amenities tend to command higher prices, while neglected ones may struggle to attract tenants or investors. In the current market, the emphasis has shifted towards the importance of location and quality over the yield on debt or cost. We anticipate opportunistic acquisitions of prime properties in prime locations.
“Another separate RICS survey uncovered that non-traditional market segments, such as aged care facilities, student housing, data centres and life sciences real estate are yielding the most robust returns. With housing set to be a battleground point in this year’s election and as the sector moves to the top of the agenda for all parties, we hope to see a long-term plan for new homes, including social housing, however, we expect we will see more short term fixes. Stimulus will be welcome but can create unnecessary froth. For voters, a stamp duty holiday or reprieve may be a welcome sign. For developers, eased planning regulations for brownfield sites and conversions will be popular. However, the government will be faced with a challenge – striking a balance between trying to increase housing supply and therefore affordability by supporting developers and private landlords but appealing to voters who do not want to see greenfield development. The planning system remains hotly political and as a result, landlords and developers are unlikely to see much in their favour. As a debt provider, we hope to support the best sites in prime locations with well-capitalised sponsors who understand their product. Following this strategy, we aim to bolster developers’ initiatives with the flexible underwriting approach that is necessary for navigating current planning rules and market uncertainty. This will enable us to continue to offer opportunities for the growing number of private individuals opting to invest in property debt.”
Comments