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RICS: Positive Housing Market Shift as Mortgage Rates Ease

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    Mortgage Interest Rates Decline Drives Positive Housing Market Shift

    The August RICS (Royal Institution of Chartered Surveyors) Residential Survey has revealed an overall improvement in housing market activity and buyer demand, supported by the modest softening in mortgage interest rates.

    The RICS Residential Market Survey, conducted by surveying agents and surveyors across the country, gives insights into the current and future state of the UK residential sales and lettings market. It is also a helpful resource for those looking to invest in buy-to-let property.

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      New Buyer Demand Rose Noticeably in August

      Results show a rise in property demand, with a net balance of +15% of participants noting an increase in new buyer enquiries during August (up from a figure of +4% beforehand). According to RICS, this marks the most positive reading for new buyer demand since October 2021.

      After almost two years of decline, the RICS report also notes a slight increase in house prices, with data suggesting a net balance of +1%. This is the first occasion since October 2022 that prices have moved out of negative territory, and +14% of respondents predict a continued modest upward trend for prices over the next three months.

      In terms of supply, the number of new listings has seen a modest increase of +7% (compared to +3% in July). Reports on the volume of appraisals being higher in August compared to the last 12 months suggest this will continue to increase, improving the options for new buyers.

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      Tenant Demand Remains Strong in the Rental Market Despite Slower Growth

      Tenant demand in the rental market continues to be positive, although the pace of growth has slowed compared to previous months. The net balance of +11% in August is lower than the +26% recorded in July, but it still reflects steady interest from renters.

      The supply of rental properties remains sluggish, with new landlord instructions again seeing a downward trend. The net balance slipped to -21% from -9% in July.

      The ongoing shortage of rental properties is expected to continue pushing rents higher. According to RICS, near-term rental price expectations point to a steady increase, with a net balance of +39% of survey respondents predicting that rents will increase in the coming months.

      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.”

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      Author

      Reece Pape

      Reece Pape is a property writer at RWinvest. Utilising up-to-date property statistics and data, Reece aims to keep investors informed on the latest market developments.

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