The Royal Institution of Chartered Surveyors (RICS) residential survey returned a response score of six per cent for new buyer enquiries, compared to seven per cent* in January. This was the second month that the sentiment for buyer enquiries was in positive territory, and RICS said this uptick in activity was present in most regions across the UK.
There was also a “solid rise” in new instructions to sell with a response score of 21 per cent, the strongest reading since October 2020. This was higher than the previous month’s measure of 11 per cent.
The average level of stock on estate agents’ books was also at its highest since February 2021, with RICS recording an average of 42 properties per estate agent. Surveyor respondents also noted a rise in market appraisals compared to the same period last year, suggesting the availability of house stock is set to pick up in the future.
Agreed sales were flat, returning a score of negative three per cent in February. RICS said that, although this was not as positive as January’s score of five per cent, it still pointed to stronger sales activity when compared to the last 12 months where response scores averaged at negative 22 per cent.
Simon Rubinsohn, chief economist at RICS, said: “The February RICS survey provides some grounds for encouragement around the sales market, with not just buyer interest staying positive for the second successive month, but also the uplift in new instructions to agents. Whether the increase in stock coming back to the market will be sustained is likely to be a critical factor in explaining how things play out over the balance of the year, especially with new build likely to remain constrained.
“Significantly, the rise in the number of appraisals taking place points in the right direction. And the government will be hoping that this trend is given a boost by the change to capital gains tax announced in the Budget.”
Improved sales activity
Surveyor respondents said sales expectations were positive in the near term, with a score of six per cent, compared to 12 per cent in January. This is expected to improve over the year, with respondents returning a reading of 42 per cent for their expectations of activity over the next 12 months.
House prices continued to fall in February, but observations were at the least negative since October 2022.
The response score of negative 10 per cent indicated a more stable trend in house prices, particularly when compared to the negative 67 per cent score returned in September 2023.
Over the next 12 months, respondents gave a score of 36 per cent for house prices, pointing to a return to growth going forward. This was also more positive than January’s reading of 18 per cent for the year ahead.
Jeremy Leaf, North London estate agent and a former RICS residential chair, said: “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.”
Sarah Coles, head of personal finance at Hargreaves Lansdown, said February’s activity did not necessarily mean the market was “flying” but rather “falling with style”.
She said buyers were “not flocking back in vast numbers” and seemed to be “approaching more tentatively to dip their toes in”.
Of the rise in stock, Coles added: “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.”
Fall in landlord instructions, rise in rents?
Tenant demand in the lettings market continued to rise in February, but at a milder pace with a score of 16 per cent.
RICS said this suggested a cooling when compared to the reading of 47 per cent six months ago.
Landlord instructions continued to fall, and RICS said this could result in rents increasing over the coming months, albeit at a slower rate than recently seen.
The negative 17 per cent score for landlord instructions marked the 19th consecutive months for negative readings.
Rubinsohn added: “There are signs that the relentless upward trend in private rents is losing momentum, but fresh demand is still comfortably outstripping supply in this area, which suggests there is unlikely to be any significant relief for tenants.
“Indeed, feedback from respondents to the survey continue to highlight the challenges in the sector resulting from a whole host of measures introduced in recent years.”
* RICS survey statistics are presented as scores between negative 100 and 100, with negative scores implying a decline, and positive readings suggesting an increase.
