The Royal Institution of Chartered Surveyors (RICS) UK Residential Survey for the month showed that there was an improvement in sales and higher buyer demand.
According to RICS, respondents gave a score of 15% for new buyer enquiries, up from 4% previously, suggesting a month-on-month rise. RICS said this was also the most positive reading for this metric since October 2021, but noted that this was increasing from a low base.
Respondents returned a reading of 6% for newly agreed sales, an improvement on the reading of minus 1% previously. The study’s respondents also suggested there would be an increase in sales in the future, with expectations for the next three months recording a score of 37%. Over the next 12 months, sales activity is set to remain strong, with surveyors giving a response reading of 45%.
As for the supply of housing, respondents to the RICS survey gave a score of 7% for new instructions, up from 3% the month before.
RICS said this indicated a positive trend in the flow of properties being listed for sale.
This coincided with a rise in market appraisals conducted in August, with a score of 23%. This was higher than the levels of appraisals undertaken during the same month last year.
According to RICS, the pipeline for supply is expected to be “relatively solid” in the near term.
Sara Palmer, distribution director at The Mortgage Lender (TML), said the “last of the summer sun warmed up the property market”, which had been “helped by mortgage rates easing”.
Simon Rubinsohn, chief economist of RICS, said: “The latest RICS survey captures an improvement in sentiment over the past month in the wake of the modest decline in mortgage rates, with buyer interest improving, albeit from a relatively low base, and stock levels edging up.
“However, anecdotal remarks from respondents still demonstrate the need for realistic pricing to get deals done with uncertainty both around the scope for further interest rate cuts and the likely contents of the forthcoming Budget keeping the mood in check.”
House price growth expectations no longer negative
In August, surveyors gave a reading of 1%, suggesting a rise in house prices. This was notably higher than a reading of negative 18% previously, and the first time since October 2022 that the metric was in the positive territory.
RICS said while most parts of the UK showed either flat or modest house price growth, performance is weaker than the national average in Wales, the South East and the South West of England.
Additionally, strong house price growth was recorded in Northern Ireland and Scotland.
In the near term, surveyors gave a score of 14% for house price growth over the next three months. This was expected to improve over the longer term, as respondents gave a reading of 50% for house prices in 12 months. This long-term view was the most positive since April 2022.
Daryl Norkett, director of real estate proposition at Shawbrook, said: “Buyer demand continues to grow as the market continues its positive trajectory. With the new Government putting housebuilding targets front and centre, optimism is returning to the sector.
“Professional landlords will also be hoping those targets are met to ease the significant supply strain and create a landscape of opportunity where they can maximise yields and meet the ever-increasing demand.”
Softer rental demand, but imbalance continues
In the rental market, surveyors recorded an 11% rise in tenant demand, weaker than the 26% reported in July.
At the same time, landlord instructions continued their negative trend, falling from minus 9% in July to minus 21% in August.
Rental prices are expected to keep rising, surveyors predicted, returning a score of 39%. This was relatively flat on the scores of 38% seen in the previous two months.
Rubinsohn added: “Affordability remains an issue in the sales market even with somewhat cheaper finance now available, but the picture appears even more acute in the lettings market, where the amount of rental stock continues to diminish.
“Contributors continue to point to landlords looking to scale back their portfolios, which will inevitably increase the imbalance that already exists in the market.”
This article was first published on Your Mortgage‘s sister site, Mortgage Solutions. Read: Lower mortgage rates bump up housing market activity – RICS
