‘Solid rise’ in homes being put on the market as buyer inquiries grow

A “solid rise” in sellers putting their homes on the market was seen in February, with the strongest upswing recorded since autumn 2020, according to surveyors.

A net balance of 21% of property professionals reported new instructions to sell rising rather than falling, marking the strongest reading since October 2020, the Royal Institution of Chartered Surveyors (RICS) said.

This finding is in contrast to the continuously negative picture cited throughout 2023, RICS added.

On average, estate agents’ branches had 42 properties, the highest number recorded by RICS since February 2021, with those surveyed noting an increase in market appraisals during the month, compared with the same period last year.

Across the UK, new buyer inquiries grew for the second month in a row, with a net balance of 6% of professionals reporting a rise rather than a fall.

Most areas of the UK have shown a recovery in buyer interest over the past two months, the report said.

However, home sales were broadly flat in February, with a balance of 3% of professionals reporting a decline rather than an increase.

The report said the latest findings are consistent with a slightly more upbeat picture for sales market activity than was the case throughout much of last year.

It continued: “Nevertheless, the near-term outlook is still somewhat cautious reflecting, in part, the suspicion that the recent easing in mortgage rates is likely to stall on the back of ongoing uncertainty about the timing and speed of interest rate reductions.”

Looking ahead, the sales expectations for the near term are positive and sales activity is expected to gain further momentum over the year ahead, the report said.

The trend for house prices continued to point downwards, but there were signs this is stabilising, the report said.

In the lettings market, tenant demand continues to rise but at a more modest pace than previously, according to RICS.

At the same time, however, landlord instructions are still dwindling. Professionals were expecting  rents to move higher over the months ahead, albeit at a slower rate.

Simon Rubinsohn, RICS chief economist, 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.

“The Government will be hoping that this trend is given a boost by the change to CGT (capital gains tax) announced in the Budget.

“Meanwhile, there are signs that the relentless upward trend in private rents is losing momentum but fresh demand is still comfortably outstripping supply in this area which suggests there is unlikely to any significant relief for tenants.”

Tom Bill, head of UK residential research at estate agent Knight Frank, said: “The economic data has fluctuated since Christmas but the direction of travel for the housing market is up.”

Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “On the one hand, a well-stocked estate agent is one of the cornerstones of a healthy market. However, on the other, sellers could find it acts as a drag on prices.

“There’s also less positive news from the mortgage market in recent weeks. Many of those agreeing sales at the moment will have agreed their mortgages back when rates were slightly lower. Since then, the market has reassessed the chances of an imminent rate cut, and put mortgage rates up.”

The report also quoted the views of property professionals.

One, based in Newcastle upon Tyne, said: “A continued lack of supply means demand for all property types is still strong. Vendors are more realistic with asking prices.”

Another, based in Newark in the East Midlands, reported: “More positivity about in the residential sales market, with increased applicant activity and viewings slowly filtering through into increased sales activity.”

A professional based in Anglesey, Wales, said: “It’s a market that rewards precision in pricing and patience from sellers.”

One in Edinburgh told researchers: “Market seems to be busy, considering it is only February. Hope to see this continue later into the year.”