UK housing market shows signs of improvement

There has been a positive shift in the housing market with buyer demand and expectations for future sales on the rise, one survey has found.

According to RICS, house prices also appear to be stabilising.

There has also been a modest rise in tenant demand at +19% – up from +16% previously – but landlord instructions remain weak at -19%.

Consequently, there’s a net balance of 34% of respondents who are still expecting rent prices to rise in the next three months.

‘Demand continues to recover gradually’

The senior economist at RICS, Tarrant Parsons, said: “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.”

He added: “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.”

Steady increase in buyer demand

Its residential survey points to a steady increase in buyer demand, with more respondents seeing a rise in new buyer inquiries last month.

That 8% rise from those surveyed is the highest positivity recorded since February 2022.

Respondents also anticipate a further rise in market activity with 13% predicting an increase in sales volume over the next three months, compared to 6% previously.

Also, 46% expect sales activity to rise in the next year – up from 42% in February.

The trend for house prices

This is the seventh month that the trend for house prices has been less negative.

The number of respondents reporting price falls has improved from -67% in September 2023 to -4% in March.

That, RICS says, points to a more stable price environment across the UK.

‘Market right now is as reliable as the spring weather’

Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “The housing market right now is as reliable as the spring weather. You might set out with expectations of sunny skies and walk straight into a rainstorm.

“It’s so patchy right now that estate agents in the same regions are reporting wildly different experiences.

“However, on the plus side, they’re forecasting clearer skies as we move into the summer.”

She adds: “Overall, there are some real positives. More upbeat sentiment and expectations of rate cuts are persuading buyers and sellers back to the market in increasing numbers.

“They’re not yet rushing to agree sales or push prices up, but agents are confident that this is on the way once the weather cheers up and mortgage rates fall.”

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