National house prices rising overall for first time in two years as market continues to pick up

RICS UK Residential Survey September 2024

• Key metrics for demand, sales and new listings all rise
• Future growth outlook for house sales looks positive at both three-months and twelve-months horizons
• National house prices rising overall with weaker growth in the West Midlands, South West and East Anglia
• Growing difficulties for renters as demand continues to grow and outstrip supply in lettings market

The latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey indicates that the UK housing market continues to pick up. The September 2024 survey found that demand, sales, and new listings had all returned to growth, while sentiment related overall national house price growth for the first time since October 2022. The outlook also looks broadly positive.

Overall demand from buyers recorded a +14% result (net balance), the third month in a row indicating growth. Sales sentiment also saw a rise, although more marginal (+5% net balance). Near-term, a net balance of +23% of respondents believes the sales market will continue to grow over the next three months, while longer-term twelve-month growth sentiment is even stronger (+45%).

New listings are also up, encouraging a growing demand, according to respondents (+22%). This is a clear rise from the previous month's +9% result, indicating a readily available supply of property for sale. Respondents also cited potential rises in Capital Gains Tax (CGT) encouraging homeowners to list their properties for sale.

Additionally, according to respondents, house prices are growing overall at a national level for the first time in two years, although some regions are seeing less of a rise - West Midlands, the South West and East Anglia. September's survey posted a +16% national price reading, up from a flat 0% result in August and positive for the first time since October 2022.

The lettings market continues to demonstrate a growing divide with demand continuing to grow and outstrip supply. September saw a +22% result for tenant demand, indicating another increase. Meanwhile, the survey reported a further drawdown in properties listed for rent, with a -29% retreat. This trend is further influenced by some landlords listing their properties for sale before potential CGT rises. Unfortunately for renters, the continuing squeeze on supply will likely mean further rent rises and difficulties finding property.

There appears to be a greater level of positivity in the market, likely connected to recent interest rate cuts by the Bank of England and a growing belief that more will come in the next few months.  A potential rise in CGT is also compelling some homeowners to add their properties to the market, however this is unfortunately contributing to a lack of supply for renters.

RICS President, Tina Paillet, said: "As we approach the 100-day mark of the new government, it is encouraging to see housing prioritised so strongly. The government has moved quickly to outline ambitious planning reforms and set housing targets aimed at increasing supply. Proposals for new towns, urban expansions, and the creation of 'greybelt' land demonstrate a clear commitment to addressing the country’s housing challenges. Now, it is crucial for developers and investors to feel confident that these reforms will not create planning, skills and resources bottlenecks, so we can make meaningful progress toward the goal of delivering 1.5 million new homes.”

"RICS survey results continue to highlight the pressures on renters, with demand consistently outstripping supply. While the Renter’s Rights Bill aims to improve standards and offer better protections for tenants, we must ensure that these reforms do not discourage responsible landlords from remaining in the market. Most importantly, the planned changes in the private rental sector fall short of tackling the core issue: increasing supply and making housing more affordable for tenants."

RICS Head of Market Analytics, Tarrant Parsons, said: "The latest survey results once again convey a brighter picture for housing market activity, with the recent easing in mortgage interest rates continuing to support a recovery in buyer demand.

"Critical for the outlook, a further unwinding in monetary policy is anticipated over the months ahead, which should create a more favourable backdrop for the market moving forward. In keeping with this idea, forward-looking sentiment data from the survey points to sales volumes gaining impetus, both in the near-term and over the next twelve months."

Notes for editors:

Commentary from survey respondents regionally can be found in the economic pdf on the back pages – you are free to use these.

About RICS

We are RICS. Everything we do is designed to effect positive change in the built and natural environments. Through our respected global standards, leading professional progression and our trusted data and insight, we promote and enforce the highest professional standards in the development and management of land, real estate, construction and infrastructure.

Our work with others provides a foundation for confident markets, pioneers better places to live and work and is a force for positive social impact.

For more information:

Kris Hicks

Khicks@rics.org

press@rics.org