Outlook for UK housing market strengthens - RICS

The UK housing market showed signs of stabilising in November, an industry survey showed on Thursday, although higher interest rates continued to weigh heavily.

According to the latest UK Residential Survey from the Royal Institution of Chartered Surveyors, the house price balance was -43 last month. While still in negative territory, the reading was well above October’s revised -61, and ahead of forecasts for -57.

The net balance for new buyer enquiries was -14, indicating buyer demand was continuing to fall. But it was the least negative figure since April 2022.

A net balance is the difference between the number of surveyors seeing rises and those seeing falls.

Near-term sales expectations for the next three months also improved, with the first positive reading, 6, since early 2022.

Simon Rubinsohn, RICS chief economist, said: "The survey provides further evidence that sentiment is a little less negative than previously was the case, with - critically - the new buyers enquiries indictor finally beginning to stabilise.

"This is being aided by increased confidence that the interests rate cycle has peaked, which is reflected in somewhat more competitive mortgage products coming to the market."

The Bank of England has raised interest rates 14 times since December 2021, to 5.25%, as it seeks to tackle surging inflation. Mortgage rates also soared in response to last autumn’s disastrous mini budget, stretching affordability even further.

However, mortgage rates are now starting to come down, and the BoE has paused interest rate hikes since August, as inflation eases.

The Monetary Policy Committee is widely expected to leave the cost of borrowing unchanged when it meets later on Thursday.

Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: "The improvement in the RICS survey for November adds weight to our view that house prices should start to increase materially next year.

“Buyer demand has rebounded to a level not seen since April 2022 and is consistent with net house purchase mortgage approvals recovering to around 60,000 in the coming months.

"We still see further declines in the official measures of house prices, which in September still was just 0.7% below its 2022 peak. But the survey suggests the outlook for next year is brighter."