RICS Residential Market survey: Property market is turning positive

RICS has published its latest Residential Market survey for January 2024, showing that the property market is turning positive.

Homebuyer and seller activity has finally started to turn positive, according to the Royal Institution of Chartered Surveyors (RICS) suggests.

The latest RICS Residential Market Survey shows new buyer enquiries were at +7% in January among respondents, up from -3% in December and the strongest level since February 2022. 

The percentage balance measure for agreed sales has also flipped from -5% to +5%, while respondents saw sales picking up over the next three months, with +14% on balance stating that they believe rises are coming. 

Sales volumes are on the rise, influenced by expectations of future interest rate cuts by the Bank of England, RICS said.

Longer-term, +44% said they believe that sales volumes will increase over the next twelve months.

Near-term price expectations have now turned more or less flat at the national level, the report suggests, with the net balance moving to -2% from -12% previously.

On a 12-month view, a net balance of +18% of respondents now expect a mild increase in house prices, the strongest reading since July 2022. 

Tarrant Parsons, senior economist for RICS, said:

“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.

“Although sales volumes through much of the year ahead are likely to remain relatively subdued compared to the longer-term average, the outlook has now turned modestly brighter on a consistent basis over the past few survey reports.

“However, this is not to say that mortgage affordability isn’t still a significant challenge, and any further unwelcome surprises with regards to inflation may still cause interest rate expectations to be revised.

“That would then pose a significant risk to any prospective recovery in the months ahead, even if the current prognosis is for the market to see a further pick-up in activity levels.”

Commenting on the report, Tom Bill, head of UK residential research at Knight Frank, said:

“Leading indicators of demand have turned more positive, and we expect the number of mortgage approvals and exchanges to catch up this spring.

“As inflation falls faster than expected, the improved outlook for rates on money markets means lenders have dropped their prices, irrespective of how cautious the Bank of England is sounding.

“We expect a 3% rise in UK house prices this year despite the presence of some inflationary pressures and rising political volatility.”

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