The August 2024 RICS Residential Survey results showed an improvement in sales market activity, supported by the recent softening in mortgage interest rates.
Moreover, respondents said they foresee the market gradually gaining further impetus moving forward, even if the near-term outlook for monetary policy remains relatively tight compared to much of the post Global Financial Crisis era.
At the aggregate level, a net balance of 15% of survey participants noted an increase in new buyer enquiries during August, up from a figure of 4% last month.
This marked the most positive reading for the demand series since October 2021.
Meanwhile, the newly agreed sales indicator posted a net balance reading of 6%, modestly higher than the figure of -1% seen last time.
Going forward, contributors anticipated the recent uptick in demand to translate into a more meaningful increase in sales volumes over the coming three months, evidenced by the near-term sales expectations measure recording a net balance of 37%.
A net balance of 45% of respondents envisaged sales activity strengthening over the next 12 months, extending the recent sequence of firmly positive readings for this indicator.
In terms of fresh listings coming onto the market, the new instructions series produced a net balance of 7% in August (compared to 3% previously).
Similarly, 23% of respondents reported that the number of market appraisals undertaken during August was higher than that seen 12 months ago.
With regards to house prices, the survey’s headline measure returned a net balance figure of 1% this time around, up noticeably from a reading of -18% last month.
While most parts of the UK showed either a flat or modestly positive picture for house prices, there were some exceptions; feedback around prices remained a little weaker than the national average across Wales, the South East and the South West of England.
By way of contrast, house prices continued to rise firmly in Northern Ireland and Scotland according to the latest results.
Back at the national level, the near-term price expectations series registered a net balance of 14% in August, consistent with a modest upward trend in house prices coming through over the next three months.
In the lettings market, tenant demand edged up slightly over the month, although the latest net balance of 11% was softer than the 26% recorded in July.
New landlord instructions once again saw a negative trend, with the net balance slipping to -21% from -9% last time.
Near-term rental price expectations continue to point to a steady increase in the months ahead, returning a net balance of 39%, little changed relative to readings of +38% seen in each of the two previous iterations of the survey.
Jeremy Leaf, North London estate agent and a former RICS residential chairman, said: “There’s no doubt the recent cut in base rate has been a shot in the arm for the sales market which is certainly in better health than a few months ago.
“We found some buyers and sellers were holding off in anticipation, so are not surprised this historically-reliable survey has picked up on that trend.
“However, longer-term concerns about the economy and increased supply has meant only realistically-priced properties are attracting most attention. ‘
“The forthcoming Budget is also a worry for those in the upper tax brackets and reflected in reduced activity around higher-end properties.”
He added: “As far as lettings are concerned, we’ve noticed a steady uptick in rents but certainly not as substantial as we saw last year and in the early part of 2024.
“Unfortunately, more landlords are selling than buying at present mainly due to concerns about regaining possession of properties from disruptive tenants.
“Rents may have hit an affordability ceiling for many but are unlikely to fall significantly while underpinned by continuing lack of stock – especially of one- and two-bedroom flats.”
Tomer Aboody, director of specialist lender MT Finance, said: “Market sentiment has noticeably improved as mortgage rates have started coming down, following the reduction in the base rate.
“We are seeing a higher level of transactions as more properties come onto the market and there is an increase in buyers prepared to take the plunge thanks to lower mortgage rates.
“Although this uplift is positive, admittedly we are starting from a low base line since the housing market has been pretty stagnant over the past couple of years.
“If the Budget does prove to be as bad as many fear, this could result in a subdued market reaction.
“Hopefully, a rate reduction will also be on the cards, which would help boost activity and sentiment.
“It looks as though buy-to-let investors will once again be hit, which will also be a negative for tenants – the more demand outweighs supply, the more rents will increase.
“Rental properties are the bread-and-butter of the UK economy, and the Government would do well to remember that.”
