Buyer demand remains broadly stable and a slight increase in positive sentiment around agreed sales is the story of the latest Royal Institution of Chartered Surveyors (RICS) monthly residential market report.
The RICS Residential Market Survey is a monthly sentiment survey of Chartered Surveyors who operate in the residential sales and lettings markets providing a snapshot of activity. September’s report painted a positive picture with overall buyer demand up for the third month in a row; and a ‘marginal’ rise in sales.
This latest report sees a fourth consecutive month of positive sentiment around new buyers enquiries (12% in October against 13% in September) and an increase in sentiment around new sales, around 9% against 5% in September. The result is an increase in overall positivity on sales expectations in the short term, up from 22% in September to 34% in October; and a similar number of contributors forecasting rising transaction volumes in the coming 12 months.
Many property market reports are indicating there is plenty of stock available. The most recent Property Trends Report from Landmark suggested new listings remained above the levels of 2019; a benchmark they consider to reflect the last time the property market could be considered ‘normal’ before the impact of COVID-19. But this growing number of properties coming to market is not yet turning into sales with completions down some 42% when compared with 2019 numbers.
The RICS report says a net balance of 14% represents a fourth month in a row of increases in the flow of instructions coming onto the sales market; and a higher number of market appraisals than 12 months ago suggests more are coming.
With plenty of stock on the market, stable buyer demand is keeping house prices high. A net balance of +16% of survey participants reported a rise in house prices over the October survey period, up from September (11%) and August (0%), consistent with house price growth gaining momentum steadily in recent months.
RICS President, Tina Paillet, said:
“The growth in residential sales could be further supported by recent interest rate announcements by the Bank of England. Meanwhile, the pending expiration in the higher stamp duty threshold in spring 2025 may cause homeowners and first-time buyers to rush to take advantage of the current rate, but this will likely be followed by a weaker trend after the deadline has passed.
“Our data continues to indicate that renters are feeling the pressure from a limited supply of rental properties and rising rents. While the Autumn Budget announcement of immediate stamp duty increases for landlords acquiring rental properties may increase opportunities in supply for owner-occupiers, it will make it more challenging to address the critical shortage of rental homes.”
RICS Head of Market Analysis, Tarrant Parsons, added:
“The UK housing market saw a continued pick-up in activity through October, with the recent improvement in buyer demand translating into growth in the number of sales being agreed. Just as importantly, forward-looking sentiment points to this brighter trend remaining in place of the coming months. That said, the rise in bond yields following the Budget, alongside a general increase in financial market implied interest rate expectations over the past couple of weeks, will likely present something of a headwind for the market to contend with over the short term.”
If homebuyers had a ‘wait and see’ approach pre-budget, the market is hopeful greater certainty on long term fiscal policy, and a further reduction in the Bank of England Base Interest Rate, will encourage the current trends to continue.
The RICS Residential Market Survey can be read in full here.