New enquiries and house sales remained steady in July, according to the latest residential property survey from the Royal Institution of Chartered Surveyors (RICS).
Overall new buyer enquiries picked up a little in July, to stand at net balance figure of +2%, an increase on the -6% recorded the month before.
Whilst still broadly flat, also it is the first time in four months that RICS has reported a positive numbers of buyers looking to enter the market.
The number of agreed sales also saw an improvement. Whilst this month’s -2% result is still inside negative territory, RICS says it is a clear improvement on the previous month and continues the positive trajectory of this measure, which stood at-13% in May and -6% in June.
Looking at the sales numbers over the next three months a net balance of +30% of respondents are now predicting sales rising over the next three months, the most positive sentiment since January 2020.
RICS said the longer-term outlook is also more optimistic, with +45% (net balance) of respondents expecting sales increases in twelve months, up from +40%.
Looking to house prices, the figures suggest these were still decreasing at the UK-wide level.
The overall figure, which captures and combines all UK regional data, reported a -19% (net balance) result. All English regions exhibited negative sentiment towards prices, with East Anglia and Yorkshire & the Humber exhibiting the weakest readings. However, Scotland and Northern Ireland saw prices rising.
Looking ahead a figure of +46% of respondents expect prices to be higher in a year’s time.
RICS pointed out that average mortgage rates came down slightly during the month as the market correctly anticipated a rate cut by the Bank of England.
However it says that while this had fed into improved positivity in the sector, but the full impact of the interest rate cut — alongside the new government’s announcements on housing reform — will not be evident until next month’s report.
In the rental market, the gap between demand and supply continued to widen in July.
Demand continued to rise modestly, with a +18% net balance figure reported this month, while sentiment towards landlord instructions stood at -16% net balance. Whilst the growth rate of the gap reduced a little, RICS said that the continued movement indicates further rental price rises were likely in the foreseeable future.
RICS chief economist, Simon Rubinsohn says: “The new government’s focus on boosting housing development alongside the recent quarter point base rate cut does appear to have shifted the mood music in the sales market, with projections for both near and medium activity picking up.
“Inevitably, significant challenges lie ahead in delivering on the ambitions around planning reform and it is far from clear that the Bank of England will follow the August move with further easing over the coming months, but, even so, the policy mix is becoming more supportive for the sector.
“However, if there is a bit more hope regarding the sales market, the difficulties in the lettings market remain as intense as ever with little prospect of any relief in sight. Demand is continuing to run ahead of supply with many respondents to the RICS survey noting that landlords are looking to reduce holdings in the face of an increasingly hostile environment for investment in the sector.”
Hargreaves Lansdown head of personal finance Sarah Coles says: “Optimism abounds in the property market, as agents have faith that interest rate cuts will breathe new life into a market that grew stuffy and stagnant in the early summer.
“But meanwhile, landlord numbers are down again, and capital gains tax rumours could make this worse.”
