House prices are climbing across the UK overall for the first time in two years as the property market is boosted by expectations of more interest rate cuts by the Bank of England, which would bring down mortgage costs.
Demand, sales, and new listings all grew in September, the Royal Institution of Chartered Surveyors (RICS) said. A balance of 16% of professionals reported prices increasing in September, up from a flat 0% result in August and the first positive reading since October 2022.
A net balance of 14% of professionals reported an uptick in buyer demand, while 5% reported an increase in sales. Looking ahead, 23% anticipate further sales growth in the next three months, and 45% expect an upturn over the next year.
Additionally, 22% of professionals reported a rise in new property listings. This increase is partly attributed to speculation surrounding a potential rise in capital gains tax, which has prompted some homeowners to list their properties sooner than they might have otherwise.
The report added it appeared to be a greater level of positivity in the market, likely connected to recent interest rate cuts by the Bank of England and a growing belief that more will come in the next few months.
Read more: UK house prices rise for third straight month amid falling mortgage rates
Tarrant Parsons, RICS head of market analytics, 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.”
The lettings market remains tight, with demand consistently surpassing supply. RICS said that while tenant demand is on the rise, the availability of rental properties is dwindling. This trend is also influenced by landlords considering sales ahead of possible capital gains tax changes.
RICS president Tina Paillet said: “The survey results underscore the pressures on renters, with demand consistently outstripping supply. While the Renters’ Rights Bill aims to improve standards and protect tenants, it’s crucial that these reforms do not deter responsible landlords from participating in the market.”
Read more: Four in 10 full-time workers priced out of homeownership
Meanwhile, property website Zoopla reported that the average cost of a UK home now stands at approximately £300 per square foot. The data revealed stark regional disparities, with Hartlepool having the lowest cost at £118 per square foot, compared to Kensington and Chelsea, which topped the scale at £1,373.
Izabella Lubowiecka, senior property researcher at Zoopla, advised potential buyers to consider the square footage of properties carefully. “An additional bedroom or bathroom may not provide the space buyers are truly seeking. Assessing the square footage can help buyers determine whether the cost per square foot is justified.”
Whilst property type certainly impacts the cost per square foot of a home, this will also vary by region. The average price per square foot is £585 in London, with buyers looking for a home in the capital very unlikely to find a home priced below the national average.
It is estimated that a third of the areas in southern England offer homes with average price of £300 or less per square foot.
In this area, historical seaside resorts and port towns offer the most affordable homes on pound per square foot basis, up to 45% below the regional average. Zoopla said areas worth considering for the best value for money were Portsmouth (£230), Plymouth (£180), Dover (£230), Great Yarmouth (£180) and Queenborough (£230).
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