There was a steady improvement in sentiment in March, with home buyer demand and the supply of available properties increasing, the Royal Institution of Chartered Surveyors (Rics) said.
But it cautioned that, against a backdrop of elevated mortgage rates, the scope for an acceleration in housing market activity “will still be relatively limited”.
A net balance of 8% of property professionals reported seeing inquiries from new buyers rising rather than falling in March. This was the most positive result since February 2022, Rics said.
The flow of fresh property listings increased for the fourth month in a row, with a net balance of 13% of professionals noting a pick-up in new instructions to sell in March.
Looking to the next three months, a net balance of 13% of professionals expect house sales to increase. Over the year ahead, a balance of 46% are expecting to see an increase in sales.
There were also signs of house prices stabilising. A net balance of 4% of professionals observed prices falling rather than rising in March.
While this was a negative reading, the balance was significantly narrower than a balance of 67% of professionals who saw prices falling rather than rising back in September 2023.
In the lettings market, demand from tenants continued to rise, while landlord instructions fell, pointing to a squeeze on supply.
Consequently, a net balance of 34% of professionals expect rental prices to rise in the next three months.
The Financial Conduct Authority (FCA) released research this week indicating that half (50%) of renters reported not coping financially or finding it difficult to cope in January. Just over six in 10 (62%) renters in the FCA’s research had seen rent increases in the previous 12 months.
Tarrant Parsons, senior economist, Rics, said: “Demand continues to recover gradually across the UK housing market, with new buyer inquiries rising for a third month in succession according to the latest survey feedback.
“With the inflation backdrop turning a little less difficult of late, this has led to expectations that the Bank of England will be able to start lowering interest rates later in the year. This should continue to support the market to a certain degree going forward.
“In keeping with this, near-term sales expectations point to an improving outlook, albeit the scope for an acceleration in activity will still be relatively limited given mortgage rates are set to remain much higher than in 2020/21.”
