The Royal Institution of Chartered Surveyors (RICS) Residential Survey for November suggested that the decrease and stabilisation of mortgage rates in recent weeks had improved sentiment in the housing market.
The net balance score for new buyer enquiries was -14 per cent*. While this indicated a weakened demand, it was the least negative reading for this metric since April 2022. RICS said regionally, feedback regarding new buyer enquiries was “much less downbeat” than a few months ago.
Simon Rubinsohn, chief economist at RICS, said: “The latest RICS Residential Market Survey provides further evidence that sentiment is a little less negative than previously was the case with, critically, the new buyers’ enquiries indicator finally beginning to stabilise. This is being aided by increased confidence that the interest rate cycle has peaked which is reflected in somewhat more competitive mortgage products coming to the market.
“However, with the cost of money likely to remain elevated for some time to come and the economic outlook still downbeat, it is not surprising that the overall tone to the anecdotal remarks from survey respondents is still quite cautious.”
Fading negativity in housing market
Agreed sales had a score of -11 per cent compared to -23 per cent previously, also pointing to an easing in the downward trend of sales. The time it takes to complete a sale shortened slightly from 20 weeks in September to 19 weeks in November.
There was a steady supply of homes coming to market in November, with the score for new instructions coming to negative five per cent in both October and November. Appraisals remained low, however, with surveyors giving a score of -41 per cent for the month.
Respondents gave a score of -43 per cent regarding the direction of house prices in November and although this still suggested declines, it was less negative than a previous score of -61 per cent. It was also positive compared to recent months.
RICS said this pointed to a moderation in house price falls, but noted that regionally, the South East and East Midlands were still seeing “deeply negative” readings while responses from Northern Ireland showed rising prices.
Stronger sales ahead
House price growth is still expected to be downbeat over the next 12 months, according to surveyors. They gave a score of -10 per cent for the period which was less negative than the previous reading of -43 per cent.
Surveyors seemed to be positive about future activity in the housing market, as the survey returned a score of six per cent for near-term sales expectations over the next three months. This was the first positive reading since early 2022, RICS said.
The optimism around longer term sales activity was even stronger with a net balance of 24 per cent from respondents for 12-month expectations. Again, this was the most positive response since January last year.
Tenant demand holds up
Tenant demand rose in November, according to 20 per cent of respondents. While still a considerable increase, RICS said it was the “most modest reading” since January last year.
This continues to be at odds with rental supply as landlord instructions received a score of -18 per cent in November, suggesting it was still in decline.
The rise in rental prices is expected to subside as surveyors predicted an increase of almost four per cent over the next year.
* RICS survey statistics are presented as scores between negative 100 and 100, with negative scores implying a decline, and positive readings suggesting an increase.
