- Jason Praill
SURVEYORS REPORTED MORE PROSPECTIVE HOMEBUYERS IN JANUARY......
.....a sign that soon-to-be buyers aren’t suffering from the winter blues.
According to the latest residential market survey from the Royal Institution of Chartered Surveyors (RICS). A net balance of +16% of respondents said they’d seen an increase in new buyer demand – up from +9% in December and the strongest reading since the height of the Stamp Duty holiday in May 2021. However, this was reported prior to the Bank of England’s decision in early February to increase interest rates – a move which could put some off from buying a new property.
New instructions fell further slightly (current net balance of -8%), with this indicator remaining negative since April. That said, more market appraisals were reported by a net balance of +3% of those responding to the survey, the first time it has been above zero since June 2021.
The average time it takes to finalise a sale (from listing to completion) has now fallen to an average of sixteen weeks, down from seventeen weeks in September 2021 and the lowest since December 2019, indicating that sale speeds have nearly rebounded to their pre-COVID normal. Sales volumes are also reported as remaining steady during January.
Looking to the next three months, new sales expectations from respondents improved with the latest net balance up to +22%, representing a ten-month high. When looking at the next year, sales were expected to improve by +24% of respondents.
House prices in January also saw no sign of letting up, with a net balance of +74% of respondents seeing an increase. On a regional level, the most significant growth reported in property prices was focused in the Northwest and Southeast of England. All UK regions/countries are anticipated to see further increases in house prices over the year ahead.
Demand from tenants in the rental market also continued to rise, according to a net balance of +64% of respondents, representing the strongest on record since 1999, whilst landlord instructions remained in decline according to -15%.
Given this ongoing mismatch between tenant demand and property supply, a net balance of +59% respondents said they expect rents to increase over the next three months, an increase of +54% taking this view beforehand. Over the course of next year, rental prices are expected to rise by around 4% on average across the UK.
Simon Rubinsohn, RICS Chief Economist, said: “The increase in new market appraisals is an encouraging signal that more supply may be funnelled onto the market over the coming months, but it remains to be seen whether any uplift in this area is sufficient to match the resilient trend in demand.
“That said, there is an inevitable question mark over the impact of rising interest rates allied to the jump in the cost of living on homebuyer sentiment.”
“Notwithstanding these developing themes, for the time being the signals on the outlook for both prices and rents remains a little worrisome with the twelve-month RICS indicators for both at, or near, series highs.
“Moreover, this pattern is also being reflected in the metrics designed to capture the trends looking slightly further out.”
It would be nice to say the UK housing market has snapped back to normal since Covid restrictions were lifted, but it hasn’t. Normality is returning but the pace is slow and the effects of the pandemic are likely to linger for longer. Supply has only picked up modestly in the first six weeks of the year but isn’t too far from the seasonal norm.
The problem is that demand is unrelenting, which will continue to keep upwards pressure on prices. We will end 2022 with a healthy level of transactions and rising prices but sellers who are holding back because they can’t find purchase options of their own may need to be patient for a while longer.