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UK estate agents have registered the first rise in housebuyer demand and sales in almost two years, according to a leading survey that highlights the impact of the falling cost of mortgages.
The Royal Institution of Chartered Surveyors’ measure of agreed sales moved into positive territory for the first time since February 2022, with a reading of five in January compared with minus five for December.
The survey measures the difference between the percentage of UK surveyors registering rises and falls in agreed home sales.
Tarrant Parsons, Rics senior economist, said the shift was “supported by the recent easing in mortgage interest rates”.
The sustained rise in interest rates by the Bank of England over the past two years had led housebuying to slump.
But mortgage providers have cut the prices of their products since last summer on the back of expectations that the BoE will reduce its benchmark rate from its current 16-year high of 5.25 per cent to 4.5 per cent by the end of 2024.
A separate Rics index tracking new buyers’ inquiries rose to seven in January from minus three in December — which was also the strongest reading since February 2022.
A measure tracking new instructions rose to 11 after lying in negative territory for most of the past three years.
Ben Hudson, managing director at Hudson Moody, said “optimism [was] returning to the market and prices starting to rise”, adding that his estate agency had a busy start to this year.
While the Rics measure of house prices was still negative at minus 18, it rose for the fifth consecutive month and was the strongest reading since October 2022. The index was also higher than the minus 25 forecast by economists in a Reuters poll.
But in the rental market, the Rics index tracking tenant demand fell to its lowest since January 2021.
Rental prices rose at a record pace in December, according to separate official data, as households struggled to afford mortgage repayments and landlords passed on higher borrowing costs.
Halifax on Wednesday said average UK house prices hit the highest level since October 2022 last month. The mortgage provider’s data came a week after lender Nationwide reported a stronger than expected 0.7 per cent month-on-month rise in house prices in January.
Separate figures published on Thursday by online property portal Rightmove showed a record number of sellers contacted an estate agent to get home valuations in January. It also reported a 7 per cent annual increase in buyer demand.
Tim Bannister, Rightmove property expert, said the early figures suggested “some pent-up demand from those who took a step back last year to consider their options while the outlook for mortgage rates was more unclear”.
