Kim Kinnaird, the director of Halifax Mortgages, says: “However, while housing activity has increased over recent months, interest rates remain elevated compared to the historic lows seen in recent years and demand continues to exceed supply. For those looking to buy a first home the average deposit raised is now £53,414, around 19 per cent of the purchase price. It’s not surprising that almost two thirds of new buyers getting a foot on the ladder are now buying in joint names.”
Responding to the Halifax data, lettings expert Marc von Grundherr – director of the Benham and Reeves agency – says: “The general view is that 2024 will be a far more fruitful year for the UK property market and we’re already seeing early signs of this, with a fourth consecutive monthly increase in house prices and a sharp increase in both new sales listings and the number of buyers submitting offers. It really is all systems go at the moment and as market activity continues to build, property values will continue to ripen.”
And Verona Frankish, chief executive of online agency Yopa, adds: “Not only have we seen positive market movement with respect to the monthly rate of house price growth in recent months, but we’re now starting to see an improvement with respect to the annual picture and it’s this measure of health that suggests the market is firmly on the up. Looking ahead, it’s likely that not only has the property market bottomed out with respect to the decline in house prices seen last year, but it’s also likely that interest rates have now peaked.”
The second piece of good news this morning comes from the latest RICS UK Residential Market Survey, out today.
It shows further improvements in key metrics across the board. In particular, the outlook for sales volumes over the next 12 months have improved, influenced by expectations of future interest rate cuts by the Bank of England.
The RICS assessment is a sentiment survey and responses regarding new buyer enquiries were at a positive seven per cent in January, up from a negative three per cent in December.
RICS says: “This result is consistent with a gradual recovery for buyer demand, and while relatively modest, it is the strongest demand since February 2022. Further to this, agreed sales also saw a rise in sentiment, tilting positive from negative five per cent previously to positive five per cent. Even more encouragingly, respondents see sales picking up over the next three months, with positive 14 per cent on balance stating that they believe rises are coming. Longer-term, the positivity increases with positive 44 per cent believing that sales volumes will increase over the next 12 months.”
In the lettings market, positive 28 per cent of contributors reported seeing an increase in tenant demand in the three months to January. That said, this rise was the most modest since January 2021.
In parallel, respondents again noted a decline in the volume of new landlord instructions, with the net balance remaining at negative 18 per cent for a second consecutive quarter. The imbalance between supply and demand is still expected to drive rental prices higher over the coming months, albeit the figure for this eased a touch to positive 41 per cent, which is down from readings of positive 52 and positive 61 per cent in the two previous quarters.
RICS senior economist Tarrant Parsons says: “The UK housing market has seen a continued improvement in buyer activity through the early part of the year, supported by the recent easing in mortgage interest rates. Although sales volumes through much of the year ahead are likely to remain relatively subdued compared to the longer-term average, the outlook has now turned modestly brighter on a consistent basis over the past few survey reports.
“However, this is not to say that mortgage affordability isn’t still a significant challenge, and any further unwelcome surprises with regards to inflation may still cause interest rate expectations to be revised. That would then pose a significant risk to any prospective recovery in the months ahead, even if the current prognosis is for the market to see a further pick-up in activity levels.”
Want to comment on this story? If so…if any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals on any basis, then the post may be deleted and the individual immediately banned from posting in future.
