The economic picture may be looking uncertain as Rachel Reeves’ recent budget continues to cause problems but the property sales market is still motoring, the latest RICS housing survey reveals.

Its estate agency members have reported growing house sales last month plus rising buyer enquiries and instructions – albeit at a slower rate than in previous months.

The ’net balance’ of agents reporting increased house sales was +5%, down from +11% during October and November, although the market looks promising for the rest of this year with +7% of agents reporting sales growth during December compared to 1% in November.

‘Net balance’ is the percentage of agents reporting uplift minus the percentage reporting a downward trend

New instructions, which measures properties placed for sale, saw a bounce, which RICS says is likely to be due to stamp duty changes in March, with a net balance of +14% reported.

This is the sixth consecutive month where respondents have reported an increase in houses being listed for sale but rising Government borrowing costs present a potential challenge for the housing market over the coming months although for now, respondents to the survey remained reasonably upbeat about the medium-term outlook.

Borrowing costs

“The latest results from the RICS Residential Market Survey points to a further improvement in sentiment in the housing market despite concerns about the potential impact of rising bond yields on borrowing costs,” says RICS Chief Economist, Simon Rubinsohn.

“Buyer enquiries rose once again, albeit at a slower pace than in November, and the headline price indicator also moved higher.

“More significantly, the signals from the survey around expectations over the next twelve months also remain solidly positive for now.

“However, the resilience of the uplift in market mood could be tested if the mortgage rates do begin to climb in a material way over the coming months.

“That, critically, would also be a concern for developers who will want to see a solid market as a backdrop for ramping up housebuilding to help meet the government’s ambitious 1.5 million homes target for this parliament.”

Ben Hudson, boss of York estate agency Hudson Moody, says: “The slower Autumn market up to the Budget appears to be behind us as we move towards 2025.

“It feels like there is tremendous pent up demand particularly amongst first time buyers as they try to beat the stamp duty deadline.”

More pressure

Tom Bill, head of UK residential research at Knight Frank, says: “Demand will come under more pressure as the impact of higher borrowing costs feeds through into mortgages. Financial markets are often more volatile in

January and President Trump’s inauguration has added to the instability in debt markets this year, intensifying the mortgage pain caused by the Budget.

“Cracks have appeared in the UK housing market since October but what Labour does next will dictate how wide they grow.”

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