By The RICS UK Residential Survey for August 2024 signals a more optimistic outlook for the UK housing market. Buoyed by a recent reduction in mortgage interest rates, both buyer demand and sales activity have seen noticeable improvements, with industry experts predicting further growth through the remainder of the year.
Key findings from the survey include:
- Buyer Demand: A net balance of +15 respondents reported increased interest from potential buyers, up from +4 in July.
- House Prices: After nearly two years of decline, house prices have begun to rise again, with a net balance of +1 indicating price growth. Moreover, +14 respondents predict continued price increases over the next three months.
- Supply: There has been a modest increase in property listings, with a net balance of +7, suggesting improved supply for prospective buyers.
In the rental market:
- Tenant Demand: While demand remains strong, the pace of growth has slowed. A net balance of +11 reflects steady interest from renters, though down from +26 in July.
- Rental Supply: The supply of rental properties remains constrained, with new landlord instructions dropping further. The net balance fell to -21 from -9 in July, indicating fewer properties becoming available.
As a result of the ongoing imbalance between supply and demand, rent prices are expected to continue rising, with +39 of survey respondents forecasting rent increases in the near future.
RICS Chief Economist Simon Rubinsohn noted the improvement in sentiment driven by lower mortgage rates but emphasised that affordability concerns remain in both the sales and lettings markets. The reduction in rental stock, in particular, is leading to higher rents as landlords continue to scale back their portfolios.
Industry comments
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “There’s no doubt the recent cut in base rate has been a shot in the arm for the sales market which is certainly in better health than a few months ago. We found some buyers and sellers were holding off in anticipation, so are not surprised this historically-reliable survey has picked up on that trend.
“However, longer-term concerns about the economy and increased supply has meant only realistically-priced properties are attracting most attention. The forthcoming Budget is also a worry for those in the upper tax brackets and reflected in reduced activity around higher-end properties.
“As far as lettings are concerned, we’ve noticed a steady uptick in rents but certainly not as substantial as we saw last year and in the early part of 2024. Unfortunately, more landlords are selling than buying at present mainly due to concerns about regaining possession of properties from disruptive tenants.
“Rents may have hit an affordability ceiling for many but are unlikely to fall significantly while underpinned by continuing lack of stock – especially of one- and two-bedroom flats.”
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