The number of buyers has risen for the second consecutive month, after an extended decline, data from the Royal Institution of Chartered Surveyors (RICS) has revealed.
As part of its Residential Market Survey for February, the professional body found that estate agents expected this positive market momentum to continue over the next few months.
The number of sales agreed fell very slightly throughout the month, and selling prices were slightly down.
The number of new properties for sale reached its highest level since October 2020, with the average agent having 42 properties on their books.
Landlord numbers continued to fall, while the number of tenants kept rising.
In general, estate expected rents to keep rising over the next few months.
Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “The housing market inspired more confidence in February, as buyers slowly resurfaced, and optimism rose among estate agents.
“However, given the broader picture, there’s still a risk that February may not have been flying after all. It could just have been falling with style.
“The return of buyers is something to be celebrated. It comes after such a long period of decline that buyers were looking ready for the endangered list.
“They’re not flocking back in vast numbers: they’re approaching more tentatively to dip their toes in.”
She added: “And while this isn’t to be sniffed at, it needs to be seen in the context of a slight fall in agreed sales, and lower prices than the same time a year earlier.
“There have also been more properties put up for sale. On the one hand, a well-stocked estate agent is one of the cornerstones of a healthy market.
“However, on the other, sellers could find it acts as a drag on prices.
“There’s also less positive news from the mortgage market in recent weeks.
“Many of those agreeing sales at the moment will have agreed their mortgages back when rates were slightly lower.
“Since then, the market has reassessed the chances of an imminent rate cut, and put mortgage rates up.
“The average 2-year rate dropped from 5.93% on the 2 January to 5.56% at the end of the month, according to Moneyfacts.
“However, by the end of February, the average 2-year mortgage rate was back up to 5.75%. It could stifle demand as the impact feeds into the market.”
Coles continued: “It’s important not to underestimate the power of sentiment though.
“Those who earn more than average will be feeling better off, thanks to easing inflation and tax cuts.
“Meanwhile, more positive news on economic growth could inspire more hope.
“The estate agents are definitely more positive about the future.
“It remains to be seen whether this is just in an estate agent’s nature, or whether better times really do lie ahead.”
Further reaction:
Jeremy Leaf, north London estate agent and former RICS residential chairman:
“The findings of the latest RICS survey chime with some of the other ‘push-me-pull-you’ reports seen recently.
“One month up a bit, the next down a bit – it’s a pattern likely to be repeated over the next few months.
“In our offices, we noticed considerable hesitation among buyers and sellers as the Budget approached.
“Many were hoping for a few goodies to be thrown their way, which would have made the whole process more financially attractive.
“However, the Budget has been and gone with precious little to incentivise as the Chancellor probably hopes that growing optimism means he had no reason to further stoke demand.
“However, lingering economic worries and more property choice means the market remains sensitive with only competitively-priced properties attracting attention.”
Tomer Aboody, director of property lender MT Finance:
“With more properties coming onto the market, we are seeing some confidence creep back as sellers feel the time is right to list.
“As rates begin to stabilise and even reduce, buyers are prioritising their purchase once more. Increased stock levels are giving them more options, which in return should keep prices in check and ensure they don’t rise too steeply.
“With further indications that the economy is getting back on track, we expect a big push from the government before the election, perhaps with a reduction in stamp duty, along with falling interest rates.”
