RICS: Agency stock has hit a three-year high but short-term price falls remain likely

Estate agency stock has hit the highest level since February 2021, new figures from the Royal Institution of Chartered Surveyors (RICS) has revealed.

The latest RICS Residential Market Survey for February showed average stock levels on estate agents books now sit at 42 properties, the highest since February 2021, with respondents noting an increase in market appraisals over the month relative to the same period last year.

A net balance of +21% of respondents recorded a rise in new instructions, the strongest reading since October 2020, in contrast to the continuously negative picture cited throughout 2023, RICS said.

At the UK level, new buyer enquiries stayed positive for the second successive month, with a +6% net balance, while most regions have now shown a recovery in buyer interest over the past two months, according to the report.

However, agreed sales were flat in February, with a -3% net balance.

Looking ahead though, the sales expectations for the near term are positive, and sales activity is expected to gain further momentum over the coming year, with a net balance of +42% expecting a rise.

Respondents were negative about house prices over the next three months but a net balance of +36% of respondents across England and Wales now envisage house prices returning to growth at the 12-month time horizon, up from a reading of +18% in January.

Simon Rubinsohn, chief economist for RICS, said: “The February RICS survey provides some grounds for encouragement around the sales market with not just buyer interest staying positive for the second successive month but also the uplift in new instructions to agents. 

“Whether the increase in stock coming back to the market will be sustained is likely to be a critical factor in explaining how things play out over the balance of the year especially with new build likely to remain constrained. Significantly, the rise in the number of appraisals taking place points in the right direction. And the Government will be hoping that this trend is given a boost by the change to capital gains tax announced in the Budget.”

Commenting on the report, Tom Bill, head of UK residential research at Knight Frank, said: “The economic data has fluctuated since Christmas but the direction of travel for the housing market is up as mortgage rates ultimately head in the opposite direction. 

“Ironically, recent weakness in the jobs market is a positive sign for buyers and sellers as pressure on the Bank grows to cut rates sooner rather than later, leading to more mortgages starting with a 3. For anyone in the property market trying to time their decision, they would be well-advised to follow employment trends closely this year.”