According to the latest residential market survey from the Royal Institution of Chartered Surveyors (RICS), a net balance of 16 per cent of respondents said they had seen demand pick up in the first month of the year. This was compared to a reading of nine per cent in December.
However, RICS noted that the response for January was prior to the base rate increasing to 0.5 per cent in February.
RICS’ survey scores are recorded on a net balance of -100 to 100, with a negative score indicating a decline in activity and a positive score suggesting a rise.
New instructions fell to a reading of -8 per cent, with the score remaining consistently in the negative since last April. Despite this, more market appraisals took place in January with a reading of three per cent of respondents saying so, making it the first time this measure has been above zero since June 2021.
Simon Rubinsohn, RICS chief economist, said: “The increase in new market appraisals is an encouraging signal that more supply may be funnelled onto the market over the coming months, but it remains to be seen whether any uplift in this area is sufficient to match the resilient trend in demand.
“That said, there is an inevitable question mark over the impact of rising interest rates allied to the jump in the cost of living on homebuyer sentiment.”
Emma Cox, sales director at Shawbrook Bank, added: “2022 is already proving to be a runaway success for those looking to sell. House prices are remaining at the record highs we’ve come to expect in the past 18 months and a lack of supply is underlying a sense of urgency up and down the property chain.”
House prices still increasing
House prices continued to rise in January, with 74 per cent of respondents reporting an increase. The most notable growth was seen in the North West and South East of England but price inflation was expected across all regions in the year ahead, respondents said.
Demand from tenants in the rental market also rose, with 64 per cent of surveyors citing so. This was the strongest on record since 1999.
Meanwhile, landlord instructions continued to slip, with a response score of -13 per cent. However, this was an improvement on -29 per cent in the previous quarter.
Due to the imbalance of supply and demand, 59 per cent of respondents said they expected rents to rise in the next three months and continue going up over the course of the year.
Rubinsohn added: “Notwithstanding these developing themes, for the time being the signals on the outlook for both prices and rents remains a little worrisome with the twelve-month RICS indicators for both at, or near, series highs.
“Moreover, this pattern is also being reflected in the metrics designed to capture the trends looking slightly further out.”
Richard Rowntree, managing director of mortgages at Paragon, said the UK’s private rented sector was “facing a stock crisis” and warned supply was failing to keep up with demand, leading to rental inflation and intense competition for rented homes,
He said: “With the new flow of property for sale stilted, it’s unlikely this issue is going to ease any time soon.
“It’s important that government policy considers all tenures of property, not just owner-occupiers, and considers the importance of maintaining a healthy and vibrant rental sector. If rental inflation continues at current rates, many people could be priced out of the rented sector, as well as homeownership.”
Completions and sales
The average time it takes to finalise a sale from listing to completion fell to an average of 16 weeks, down from 17 weeks in September. This was the shortest span of time since December 2019 suggesting a return to pre-pandemic timeframes.
Sales volumes were steady in January, having weakened throughout much of the second half of 2021.
Respondents said they expected new sales to improve in the next three months, with a score of 22 per cent. This represented a 10-month high for this measure. For the year ahead, 24 per cent of respondents said sales would increase.
