Spring has reportedly sprung in UK property market with the latest RICS Residential Market Survey showing the number of new homes listed for sale has risen for the first time in twelve months, this despite ongoing caution over the rising cost of living and higher interest rates.
In March, +8% of respondents reported a rise in the volume of fresh listings coming onto the sales market. New buyer enquiries also rose this month too with +9% of respondents reporting a rise. This is the first time since the pandemic that the survey metrics for supply and demand have been so closely in line.
Although the small increase in the number of new listings becoming available is encouraging, the average number of properties on estate agents’ books remains close to historic lows. The number of agreed sales was unchanged from February with +9% reporting an increase, this being indicative of a steady upward trend in transaction numbers.
This continued moderate rise in housing market activity sees respondents anticipating the same for the near term. Looking to the next three months, sales expectations remain positive with +16% of contributors expecting a rise. Looking to this point next year, sales volumes look broadly stable with +2% anticipating an increase.
Despite the slightly more encouraging news on the supply front, house prices continue to rise at a firm pace. This month, +74% of respondents saw a rise in house prices and is almost identical to the average seen over the past twelve months. Northern Ireland, Wales and the North of England continue to see the steepest rise in house prices too.
Looking ahead, respondents expect house prices to rise further in the coming three or twelve months (net balance of +30% and +65% respectively). Looking over the next five years, contributors to the survey expect house prices to increase around 4% per annum.
In the rental market, for the first time since July 2020, landlord instructions rose. Demand continues to rise at a robust pace however, with +54% of respondents citing a rise in March. Whilst more properties are being listed for rent, demand still outpaces supply, and rental growth expectations remain elevated with +64% of respondents predicting a rise, the strongest reading on record. Looking ahead, contributors anticipate rents to rise by 4% for the next twelve months and 5% each year when looking at the five-year projections.
RICS Chief Economist, Simon Rubinsohn, commented: “Despite mounting concerns about both the macro environment and the war in Ukraine, for now the feedback to the RICS survey shows the housing market remains resilient. Rising interest rates have begun to push up the cost of mortgage finance but debt servicing remains low in a historic context which helps to explain why the new buyer enquiries indicator remains in positive territory.
“Meanwhile, it is encouraging that a little more stock appears to be returning to the market. This is still early days in that inventory remains not far off historic lows but if the trend continues, it could help to create a better balance between supply and demand. That said, there is little evidence of this outcome materialising in the twelve-month metrics which continue to point to further increases in prices and a flatter pattern in transactions.”
