"Although the latest survey results continue to signal a steady improvement in buyer demand across the residential market, the broader macro environment is likely to pose additional headwinds moving forward."
- Tarrant Parsons, head of market analytics at RICS
The UK housing market remains resilient, with national house price growth continuing to strengthen and buyer demand maintaining an upward trend, according to the latest RICS Residential Survey for November.
Despite higher mortgage interest rates, the near-term outlook for market activity remains relatively positive.
The survey’s national house price indicator, in terms of net balance, posted a figure of +25% in November, up from +16% in October. This marks the fourth consecutive monthly increase, further cementing the upward trajectory of house price growth observed since the summer. Respondents also expect house prices to continue rising over the next three and twelve months, reflecting a robust outlook for the year ahead.
New buyer enquiries maintained positive momentum, recording a net balance of +12%; largely unchanged from the previous month and highlighting a modest but sustained recovery in buyer demand.
However, agreed sales volumes remained broadly flat, with a net balance of +1% compared to +8% last time round. Looking ahead, a net balance of 19% of respondents anticipate an increase in sales activity over the next three months, although this figure is more moderate than last month’s reading.
Supply-side trends were also positive, with new instructions rising for the fifth consecutive month, as evidenced by a net balance of +17%. Nevertheless, market appraisals in November were on par with levels seen a year ago, which could signal a potential slowdown in the pipeline of new listings as we move into 2025.
Tarrant Parsons, head of market analytics at RICS, commented: “Although the latest survey results continue to signal a steady improvement in buyer demand across the residential market, the broader macro environment is likely to pose additional headwinds moving forward. Most significantly, the recent rise in mortgage interest rates may curtail the recovery in market activity before long, and this is reflected in the slightly less optimistic sales expectations data coming through this month.
“Moreover, measures of consumer and business confidence across the economy have deteriorated of late and, if sustained, this could begin to feed through into housing market conditions in the months ahead”.
Jeremy Leaf, north London estate agent and former RICS residential chairman, commented: “Sales prices have hardened partly because the Budget was not as bad as feared so some pent-up demand has been released. However, more choice, slower-than-expected falls in mortgage costs and continuing worries about the cost of living, means caution prevails. As a result, competitive asking prices are essential if sellers want to attract attention – particularly over the holiday period.
“With rentals, supply has only increased marginally whereas demand and rent levels have eased in response to affordability concerns. Those properties where rents previously increased the furthest and fastest have been particularly affected. Only realistically-priced stock is generating offers with smaller flats holding sway in the popularity stakes over larger houses.”
Tomer Aboody, director of MT Finance, added: “There continue to be indications of a good level of confidence in the market, which has been evident since the reduction and stability in both mortgage rates and inflation.
"Both sellers and buyers are pushing to transact, as affordability is improving.
“While the Budget is now behind us, its full impact has yet to be felt. However, we are hopeful that this confidence in the market continues, with further rate cuts expected in the new year and buyers and sellers perceiving it to be a good time to transact."
