The Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey found that according to surveyors responding to the research, despite the positive house price growth across the UK, there were smaller rises in the West Midlands, the South West and East Anglia.
Respondents gave a score of 11% for house price increases, up from a result of 0% in August and negative 16% in July.
RICS said this response was “now consistent with house prices rising at the national level, thereby ending a run of negative or flat returns for this indicator stretching back to October 2022”.
Looking ahead, respondents expect house prices to rise further, as indicated by a score of 12% for the next three months. Over the longer term, surveyors predicted house prices would continue to increase, with a score of 54% for the next 12 months. This was the strongest reading for the 12-month projection since April 2022, with all regions in the UK expected to record an increase.
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Housing demand and sales activity remain healthy
Some 14% of respondents said demand for house purchase had risen in September, which was broadly in line with a reading of 16% the month before.
RICS said that while the improvement was coming from a low base, it was the third month running that the buyer demand metric had been positive.
There was little change in sales volumes in September, as surveyors returned a reading of 5% compared to 6% previously.
RICS said although this was modestly positive, it still signalled an improvement in sales activity, as it was higher than the average negative 7% recorded over the previous three months. Going forward, surveyors gave a score of 23% for sales in the next three months, suggesting they predicted activity would rise.
The sentiment around sales over the next 12 months was even stronger, with a score of 45%.
As sales activity improves, surveyors also reported a rise in the flow of housing supply.
Respondents gave a reading of 22%, pointing to an increase in new instructions to sell in September. This was higher than the already positive reading of 9% in August.
Respondents said some homeowners were encouraged to list properties for sale to avoid possible increases in capital gains tax (CGT).
Stock levels also rose, with member branches having an average of 44.6 available properties in September, which was the highest level since December 2020.
Respondents also said the market appraisals undertaken in September were higher than the levels seen a year ago, suggesting the pipeline for instructions was “relatively solid”.
Tarrant Parson, head of market analytics at RICS, said: “The latest survey results once again convey a brighter picture for housing market activity, with the recent easing in mortgage interest rates continuing to support a recovery in buyer demand.
“Critical for the outlook, a further unwinding in monetary policy is anticipated over the months ahead, which should create a more favourable backdrop for the market moving forward. In keeping with this idea, forward-looking sentiment data from the survey points to sales volumes gaining impetus, both in the near term and over the next 12 months.”
Rental supply still outweighed by demand
RICS’ report showed that tenant demand was still rising, with a score of 22% in September. This was up on a reading of 11% in August.
At the same time, rental supply continued to weaken with a score of negative 29% for the volume of landlord instructions coming to market. This was weaker than the response of negative 21% in the previous month.
RICS said this was further influenced by some landlords putting properties up for sale ahead of possible increases in CGT.
This imbalance in supply and demand resulted in respondents giving a score of 39% for rental prices, suggesting they would rise over the next three months.
Tina Paillet, president of RICS, said: “RICS survey results continue to highlight the pressures on renters, with demand consistently outstripping supply. While the Renters’ Rights Bill aims to improve standards and offer better protections for tenants, we must ensure that these reforms do not discourage responsible landlords from remaining in the market.
“Most importantly, the planned changes in the private rental sector fall short of tackling the core issue: increasing supply and making housing more affordable for tenants.”
