Surveyors report rise in house prices for first time in nearly two years
Housing market sentiment is improving following a modest decline in mortgage rates and growing buyer interest, Rics said.
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House prices are showing signs of increasing for the first time in nearly two years as market activity picks up, according to surveyors.
Price growth moved into positive territory last month for the first time since October 2022, the Royal Institution of Chartered Surveyors (Rics) said.
A net balance of 1% of professionals reported prices rising rather than falling in August – and a balance of 14% expect a steady increase over the next three months.
Many lenders have made cuts to their mortgage rates in recent weeks, with the Bank of England also recently cutting the base rate.
August’s survey results also indicated a rise in the number of house hunters, with a net balance of 15% of professionals noticing an improvement in this survey indicator, up from a balance of 4% in July.
Anecdotal remarks from respondents still demonstrate the need for realistic pricing to get deals done
On the supply side, the number of new property listings has also shown an increase, with a balance of 7% of professionals seeing a rise in August, up from 3% in July.
In the rental market, demand from tenants is continuing to rise, although the pace of growth has slowed compared with previous months, Rics said.
It added that the supply of rental properties remains sluggish, with new landlord instructions falling.
The ongoing shortage of rental properties is expected to keep pushing rents higher. A net balance of 39% of professionals predict that rents will increase in the months ahead.
Rics chief economist, Simon Rubinsohn, 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.
“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.”
Charlotte Nixon, a mortgage expert at wealth manager Quilter, said: “Given the proliferation of 4% mortgage deals on the market now and the feeling that we are past the worst of this period of higher interest rates there is a sense that the housing market has turned a corner this autumn.
“It’s clear that many buyers are seizing opportunities, likely driven by a mix of stabilising market conditions and the anticipation of future potential shifts in interest rates.”
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The gradual drift southwards in mortgage rates is definitely helping the property market, but the timing of the pick-up in demand means renewed enthusiasm is likely to owe more to a sentiment boost from the Bank of England’s rate cut last month.
“It has helped convince buyers that life is likely to get easier rather than harder over the coming months, so they can afford to take the plunge.”
The report was released as research from KPMG indicated that around half (49%) of adults would prefer a low-carbon home if looking to move.
Reduced bills, wasting less energy and helping to address climate change were among people’s motivations for this option.
The survey of 2,000 people across the UK, carried out by Opinium Research during August, found nearly two-thirds (63%) of people believe UK households need to reduce emissions from their homes.
However, more than a third of people (37%) said they know nothing about heat pumps, although half (50%) believe that solar panels and heat pumps will help to save money on energy, while 37% anticipate they will make homes more comfortable.
Simon Virley, head of energy and natural resources at KPMG in the UK, said: “A step change is now needed to accelerate the uptake of low-carbon heating solutions and energy efficiency measures in the UK.
“It requires a fundamentally different approach to overcome the barriers to mass consumer adoption – cost, complexity and convenience – to drive more co-ordinated delivery, and to unlock much-needed private investment.”