‘Little bit of respite’ for housing market after challenging year

The housing market has had some respite in recent weeks after a challenging year, according to surveyors.

Inquiries from new buyers are approaching a flatter trend, after falling in recent months, according to the December 2023 report from the Royal Institution of Chartered Surveyors (Rics).

The volume of newly agreed sales, while still falling, was at its least negative since March 2022, Rics’ survey of property professionals found.

Professionals predicted a solid recovery in home sales volumes emerging in 2024.

It also now takes 18 weeks on average to complete a sale, compared with 20 weeks back in September 2023, the report said.

House prices continued to follow a downward trend in December, but the negative pressure on prices is diminishing, Rics said.

Looking to the three months ahead, prices are expected to continue edging downwards, before stabilising by the end of the year.

The latest feedback on house price expectations remains varied across the UK, with professionals in Northern Ireland, the north west of England and Scotland anticipating higher prices in 12 months, the report said.

Looking at the rental sector, tenant demand rose over the month.

A lack of properties available on the lettings market continues to underpin rising rental prices, Rics said.

Longer-term projections point to a nearly 4% increase in rents over the year ahead and for rental growth to average 5% per year over the next five years, the report said.

Rics senior economist Tarrant Parsons said: “With 2023 proving to be a particularly challenging year for the UK housing market, it appears recent weeks have seen a little bit of respite emerge.

“Supported by an easing in mortgage interest rates of late, buyer demand has now stabilised, and this is expected to translate into a slight recovery in residential sales volumes over the coming months.

“Nevertheless, the lending climate is set to remain restrictive compared to much of the post-global financial crisis era next year, meaning any uplift in activity is likely to be limited for the time being.”

Tom Bill, head of UK residential research at Knight Frank said: “The predictable result of mortgage lenders dropping their rates is that demand has increased and price declines in the UK housing market appear to have bottomed out. We expect UK prices to rise by 3% this year and sales volumes to increase from a low base in 2023 as the economic convulsions of recent years fade.”