Buyer demand and house prices both up, report RICS agents

Buyer demand and house prices are both showing strong growth, the latest RICS market report reveals.

The survey of its members during November shows that despite higher mortgage rates, the outlook for the housing market remains positive. RICS’ national house price indicator posted a figure of +25% in November, up from +16% in October.

This marks the fourth consecutive monthly increase, further cementing the upward trend in house price since the summer.

Robust outlook

House prices will continue to rise over the next three and 12 months, reflecting a robust outlook, RICS members predicted.

New buyer enquiries maintained positive momentum, recording a net balance of +12%; largely unchanged from the previous month, and highlighting a modest but sustained recovery in buyer demand.

Supply side trends were also positive, with new instructions rising for the fifth consecutive month, as shown by a net balance of +17%.

However, agreed sales volumes remained broadly flat, with a net balance of +1% compared to +8% last time round.

Landlord instructions

In the lettings market, tenant demand declined slightly in November, with a net balance of –1%, marking the first decline since 2020.

Meanwhile, landlord instructions continued to fall, with a net balance of –13%, contributing to the ongoing imbalance between supply and demand in the rental sector.

The recent rise in mortgage interest rates may curtail the recovery in market activity before long.”

Tarrant Parsons, Senior Economist at RICS, says: “Although the latest survey results continue to signal a steady improvement in buyer demand across the residential market, the broader macro environment is likely to pose additional headwinds moving forward.

“Most significantly, the recent rise in mortgage interest rates may curtail the recovery in market activity before long, and this is reflected in the slightly less optimistic sales expectations data coming through this month.”

Industry reaction

Tom Bill, Head of UK Residential Research at Knight Frank, says: “Current UK housing market data feels somewhat artificial. Demand is being boosted by sub-4% mortgage deals that are no longer available, and some buyers are acting ahead of a stamp duty hike in April.

“Following the increase in government spending announced in the Budget, we recently revised down our UK house price forecasts to reflect the risk that inflation and mortgage rates will stay higher for longer.”

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