Housing market cautiously optimistic

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However, sales in the near term are only slightly positive, and other indicators remain in negative territory

The latest RICS UK Residential Survey indicates an improved outlook for the housing market.  This improvement in sentiment is backed by a small decline in mortgage rates over recent weeks.

However, sales in the near term are only slightly positive, and other indicators remain in negative territory.

At the UK level, the net balance reading for new buyer enquiries came in at -14 per cent in November. While this signals buyer demand is still dropping, it is the least negative figure since April last year.

When viewed at a regional level, feedback is mixed regarding new buyer enquiries, with positive readings in the Northwest and Northern Ireland. London’s new buyer enquiries have turned less negative (-12 from -31), as have other areas like Wales (-9 from -57), however Yorkshire and Humber and the North have seen further declines.

For agreed sales, the current national net balance of -11 per cent compares with a reading of -23 per cent in October and indicates the downtrend in sales volumes is easing.

Looking ahead, near-term sales expectations over the next three months improved with the first positive reading since early 2022 (+6).

At the twelve-month time horizon sales expectations are much more positive with a net balance of +24 per cent of respondents expecting an improvement in sales activity, marking the most upbeat return for this forward-looking measure since January last year.

House price sentiment has also turned less negative with a net balance of -43 per cent in November. While this continues to signal decline in house prices, this sentiment has improved over the past three months.

RICS chief Economist, Simon Rubinsohn says the latest RICS survey provides further evidence that sentiment is a little less negative than previously was the case with the new buyers’ enquiries indicator finally beginning to stabilise.

This is being supported by increased confidence that the interest rate cycle has peaked which is reflected in somewhat more competitive mortgage products coming to the market, he added.

However, he says: With the cost of money likely to remain higher for some time to come and the economic outlook still downbeat, it is not surprising that the overall tone to the anecdotal remarks from survey respondents is still cautious.

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