According to its latest residential market survey, the Royal Institution of Chartered Surveyors (RICS) showed that new buyer enquiries were positive for December, with a net balance of plus nine per cent of those surveyed saying enquiries had improved.
This is the fourth consecutive month of positive growth, with November’s net balance for new enquiries pegged at plus 13 per cent and October’s net balance coming in at plus 10 per cent. September was net balance zero.
The report said that whilst new buyer enquiries had increased at a “modest rate”, a lack of new listings meant enquiries were not translating into sales volumes.
In December, the net balance was negative 14 per cent of contributors reporting a decline in new listings. This is the ninth consecutive month of negative readings.
New instructions also fell or remained stagnant across all parts of the UK, and agreed sales dipped, with the net balance standing at negative 13 per cent,
However, plus 14 per cent of respondents think sales volumes will return to growth over the next three months, and this goes up to plus 16 per cent on a 12-month horizon.
It also found that plus 69 per cent of survey participants reported further house price increases in the month, which is in line with plus 71 per cent the month before.
It continued that all areas saw strong uplift in prices and the “momentum [showed] no indication of softening”.
Lack of pick-up in transactions ‘worrying’
Tomer Aboody, director of property lender MT Finance, said that heading towards the end of last year it was a similar trend with the lack of stock “inevitably pushing up property prices”.
He said: “If there are several buyers, or more, competing for a property, it stands to reason that this will lead to a higher sale price. Cheap mortgages have helped buyers push themselves to afford that property with more space.”
He added that whilst raising prices was good news for homeowners who were not moving, the lack of pick-up in transactions was “worrying”.
Aboody explained: “Mobility is essential, whether that’s getting on the ladder for the first time, moving up it to buy a bigger home in which to raise a family, moving across the country for work or downsizing when you no longer need that big family home.
“The inability to do these things stops the market from functioning effectively and until a solution is found, such as removing stamp duty for downsizers, it is hard to see this situation changing.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “On the ground, demand is still increasing – especially for houses – as many buyers try to come to terms with a new ‘normal’ as far as their hybrid work and commuting patterns are concerned.”
He added that valuation requests and listings were increasing, which was expected at this time of year but not fast enough to keep up.
Leaf continued: “However, rising inflation and interest rates, and the impact of these on real wages, are fuelling concerns about longer-term affordability.
“As a result, we expect property prices to rise further, particularly while stock shortages are providing support, but more modestly than last year while transaction numbers will sadly suffer too.”