In the latest RICS Residential Survey published today, there’s a discernible shift towards a more positive outlook for the housing market. This optimistic sentiment is underpinned by a modest decrease in mortgage rates observed in the recent weeks. The slight ease in financing costs appears to be contributing to a cautiously improved perception within the industry.
Despite these positive signs, the survey suggests that the near-term sales outlook remains only marginally positive. While there’s a glimpse of optimism, it’s important to note that the overall market indicators are still navigating negative terrain. This nuanced scenario calls for a closer examination of the various factors influencing the real estate landscape, highlighting a mix of positive and cautionary signals that warrant ongoing attention within the industry.
Against the backdrop of this evolving landscape, stakeholders and industry observers are keenly watching how the housing market will respond in the coming months. The delicate balance between the mildly positive sales outlook and lingering negative indicators sets the stage for a dynamic and potentially transitional period for the real estate sector, where close monitoring of emerging trends becomes imperative.
RICS, the institution that assesses market trends through the lens of its members’ sentiments, adopts a straightforward ‘plus’ or ‘minus’ method for its evaluations.
Taking a broader perspective on the UK property market, the net balance reading for new buyer inquiries stood at minus 14 percent in November. This indicates a sustained decline in buyer demand, albeit with a silver lining – it’s the least negative figure observed since April 2022. Delving into regional nuances, the feedback on new buyer inquiries paints a varied picture. The North West and Northern Ireland report positive readings, suggesting a more optimistic outlook.
Zooming in on London, the scenario for new buyer inquiries has undergone a shift towards the positive, transitioning from minus 31 to a more moderate minus 12. Likewise, other regions such as Wales have experienced improvements, moving from a substantial minus 57 to a more hopeful minus nine. However, the regions of Yorkshire and Humber, as well as the North, continue to grapple with further declines in buyer inquiries. This dynamic showcases the intricate and diverse nature of the current property market landscape in the UK.
For agreed property sales, the latest national net balance is minus 11 percent, an improvement from the October figure of minus 23 percent. This suggests a slowing down of the decline in sales volumes. Notably, East Anglia, the North West, and Northern Ireland are all showing positive figures.
Looking ahead, short-term sales expectations for the next three months have improved, marking the first positive reading since early 2022, registering at plus six. At the twelve-month horizon, sales expectations are notably more optimistic, with a net balance of plus 24 per cent. This indicates that a significant proportion of respondents anticipate an improvement in sales activity, making it the most positive outlook since January 2022.
Regarding house prices, sentiment has shifted to be less negative, with a net balance of minus 43 percent in November. While this still indicates a decline in house prices, the sentiment has shown improvement over the last three months, moving in a less negative direction.
In the lettings market, tenant demand is on the rise, according to plus 20 percent of respondents. However, this marks the most modest reading since January 2022. Despite increasing demand, the challenge persists on the supply side, as landlord instructions continue to decline.
Looking into the future, although there has been a slight easing in twelve-month expectations, the projection is for rents to experience a close to four percent increase at the headline level over the next year.
Providing insights into the current market sentiment, RICS Chief Economist Simon Rubinsohn notes, “The latest RICS Residential Market Survey indicates a shift towards a less negative sentiment, with the new buyers’ enquiries indicator showing signs of stabilization. This positive development is supported by an increasing confidence that the interest rate cycle has reached its peak, leading to the introduction of somewhat more competitive mortgage products in the market.
“Despite these encouraging signs, it’s essential to acknowledge that the cost of money is likely to remain elevated for an extended period. Additionally, the economic outlook remains subdued. Consequently, the overall tone reflected in the anecdotal remarks from survey respondents continues to be quite cautious.”
Taking a closer look at the rental landscape, the expectation of a four percent rise in rents over the next year indicates a notable trend. This projection aligns with the evolving dynamics in the market, hinting at a cautious optimism spurred by certain factors, such as the stabilization of new buyers’ inquiries and a more competitive mortgage landscape. However, the overarching economic climate introduces an element of prudence, emphasizing the need for a balanced perspective in interpreting these developments.
Read more Property Investing News HERE
