UK housing market activity on the up as mortgage rate cuts continue

RICS UK Residential Survey, December 2023

• Both near term and year ahead sales expectations pick-up for a second consecutive month
• Buyer enquiries indictor now flat with least downbeat reading since April 2022
• House price trend now expected to remain largely flat at the UK level over the year ahead

The December 2023 RICS UK Residential Survey shows activity picking up, and an improvement on last month's figures as the trend towards lowered mortgage rates continues. Near-term sales expectations moved up a touch more positively, while the longer-term outlook illustrates a market moving out of negativity and into a flatter environment.

The new buyer enquiries indicator registered a reading of -3% in December, up from the -13% result in November, approaching a flat reading. This is the fourth successive month recording a reduction in negative buyer enquiry activity, moving into neutral territory (between -5 % and +5%) for the first time since April 2022. Similarly, the -6 % result recorded for newly agreed sales is the least negative figure since March 2022.

Near-term sales expectations for December increased to +12%, with respondents predicting a solid recovery in residential sales volumes emerging in 2024, with the latest net balance climbing from +24% to +34%. It also now takes 18 weeks on average to complete a sale, compared to 20 weeks back in September 2023.

The headline house price gauge posted a reading of -30 % in December, compared with readings of    -41% and -60% in November and October, respectively. This result suggests downward pressure on prices is diminishing, with the latest reading its least negative since November 2022.

Near-term (three month ahead) price expectations remain marginally negative, but December's -13 % reading again points to an anticipated easing in the pace of price declines relative to November's -23% result. Respondents foresee house prices stabilising at the national level, posting a net balance of zero in December against the -10 % recorded in November. The latest feedback on house price expectations remains varied across the UK, with respondents from Northern Ireland, the North West of England, and Scotland anticipating higher prices on a twelve-month view.

Tenant demand rose over the month in the lettings market, posting a net balance of +17% of survey participants, although demand growth has dipped noticeably over recent months. Nevertheless, with landlord instructions remaining scarce, having declined continuously over the past year, a lack of properties available on the lettings market continues to underpin rising rental prices. Consequently,+50% of respondents expect rents to continue to rise over the near term, with longer-term projections now pointing to a nearly 4% increase over the year ahead and for rental growth to average 5% per annum over the next five years.

-ENDS-

Notes for editors:

You may access a full copy of the report at this page.

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

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