RICS: Lower mortgage rates are reducing housing market negativity

Negative outlooks appear to be reducing amid property professionals as falling mortgage rates filter through to the housing market, according to the latest RICS (RICS) Residential Market Survey. 

The latest RICS report showed while house price predictions for the next 12 months remained negative in December at -30%, this was down compared with readings of -41% and -60% in November and October, respectively.

This is the least negative reading since November 2022.

Respondents to the survey were also less negative about prices over the next three months, with a reading of -13% in December compared with -23% in November. 

The new buyer enquiries indicator registered a reading of -3% in December, up from the -13% result in November.

This is the fourth successive month where there was a reduction in negative buyer enquiry activity, the RICS said.

Similarly, the -6 % result recorded for newly agreed sales is the least negative figure since March 2022.

Near-term sales expectations over the next three months for December increased to +12%, with respondents predicting a recovery in residential sales volumes emerging during the whole of 2024, with the latest net balance climbing from +24% to +34%.

Sales are also progressing faster, RICS members said and it now takes 18 weeks on average to complete a sale, compared with 20 weeks back in September 2023.

Property sale stock remained flat though at an average of 39 properties per agent.

Tarrant Parsons, senior economist at the RICS, 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.”