Despite challenging economic conditions in 2023, confidence in the UK housing market continues to grow. According to a closely watched survey by the Royal Institution of Chartered Surveyors, the 12-month house price expectations score doubled to 36 last month from 18 in January, hitting its peak since June 2022. Additionally, the survey indicated a rise in new properties entering the market, with a separate index tracking new instructions to sell rising to 21 in February, the most robust figure recorded since October 2020.
The RICS survey serves as a crucial indicator of the property market's health. After experiencing negative territory throughout 2023, the latest report suggests that recent improvements in house prices and mortgage approvals are set to continue. Tom Bill, head of UK residential research at Knight Frank, highlighted the positive trajectory of the housing market despite fluctuations in economic data, citing falling mortgage rates as a driving factor.
While mortgage rates have fallen from their peak last summer, they stalled last month as financial markets reevaluate expectations for Bank of England rate cuts this year. Despite this, the RICS index for house price performance over the past year showed significant improvement, rising to minus 10 from minus 18 in January, the highest figure since October 2022.
John Frost, managing director at Slough-based estate agency The Frost Partnership, noted that the market is gaining confidence with interest rates leveling off and inflation decreasing. The survey also revealed positive trends in buyer inquiries, indicating an upward trend in buyer demand.
Rics chief economist Simon Rubinsohn expressed optimism about the sales market, citing encouraging trends in buyer interest and new instructions to agents. However, there were signs of cooling in the rental market, with expectations of rental prices over the next three months slightly declining and tenant demand easing from its peak last July.
Overall, while there are indications of a more stable housing market with positive trends in buyer demand and sales volumes, challenges remain, particularly in the rental market where demand continues to outstrip supply.
