Estate agents believe housing market may soon emerge from slump
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For the first time in almost two years, most estate agents think they will be selling more homes in a few months’ time than they are currently.
In the latest monthly survey from the Royal Institution of Chartered Surveyors, a net 6 per cent of agents expect to sell more houses in February than they did last month.
The Rics acknowledged that, given it was only a “marginally positive” reading, any recovery in sales volumes is likely to be “relatively modest”.
However, that reading, along with a number of other responses in the survey, suggest that the housing market may soon finally emerge from its 2023 slump.
Simon Rubinsohn, chief economist at the Rics, said the survey results were “further evidence that sentiment is a little less negative than previously was the case”, although he accepted that many agents are “still quite cautious”.
The coronavirus lockdowns triggered a once-in-a-generation rethink of how and where people wanted to live — the upshot of it all was the so-called “race for space”, where people sought out bigger homes with more garden space. As demand boomed, estate agents almost ran out of homes to sell and developers could not build houses fast enough. But that demand dried up rapidly in the autumn of 2022 after the mini-budget sent mortgage rates spiralling, and they have kept rising for much of this year.
However, in recent weeks mortgage rates have been edging back slightly, with financial markets betting that central banks are done increasing interest rates and may even look to cut them in the not-too-distant future. Rubinsohn said “somewhat more competitive mortgage products” are now coming to the market, which is improving affordability for would-be buyers.
The Rics said this is what has driven the increased optimism — or at least reduced pessimism — among estate agents and surveyors.
A net 24 per cent of respondents now believe property sales will be higher in a year’s time, the strongest reading since January 2022.
Most other metrics in the Rics’s survey remain negative, albeit less so than in previous months. The majority of agents agreed fewer sales in November than they did in October, but at a net 11 per cent, the reading was an improvement on the net 23 per cent recorded in the previous survey.
Similarly, most agents and surveyors reported another fall in new buyer enquiries, although it was the smallest majority since April 2022. The Rics said that feedback about demand “has now turned much less downbeat across all parts of the UK than was the case a few months ago”.
House prices have held firmer in 2023 than many had predicted entering the year, which economists have largely put down to an absence of forced sellers keeping supply tight. Agents are still not seeing many new properties come to the market, the latest survey found.
Those polled suggested that the pace of price declines has “moderated to a certain extent” in recent weeks, although the vast majority are still seeing prices fall, especially in the southeast of England and the East Midlands.
“Bucking the broader trend entirely, respondents have cited a clear upward move in house prices across Northern Ireland in recent months,” the survey said.
In previous reports, the suggestion had been that prices still had plenty further to fall over the next 12 months. However, only a net 10 per cent of agents think prices will be lower in a year’s time than they are now, suggesting that “only a slender further decline in aggregate house prices” is now predicted.
