UK housing market remains solid despite economic worries - RICS

The UK housing market had solid growth in March as the number of homes listed for sale rose despite worries about higher living costs and interest rates, a survey showed.

The Royal Institution of Chartered Surveyors' (RICS) residential market survey found that +8% of estate agents had a rise in fresh listings and that new buyer enquiries rose with +9% of respondents reporting an increase. This was the first time since the start of the pandemic that supply and demand had been so closely in line.

The number of agreed sales was unchanged from February at +9%, showing a steady increase in transactions. But the average number of properties on agents' books stayed close to historic lows. RICS' figures show the difference between agents reporting increases and declines.

Agents were moderately optimistic about the outlook with +16% of respondents expecting activity to increase over the next three months and with agents expecting volumes to be broadly stable over the coming year.

House prices continued their upward trend with +74% of agents reporting increases, in line with the trend over the past year. Northern Ireland, Wales and northern England had the biggest increases.

Respondents expect prices to keep rising over the next three and 12 months despite worries about higher living costs and potential interest rate increases designed to combat inflation. In the rental market landlord instructions rose for the first time since July 2020 but demand still outstrips supply and rents are expected to rise.

Simon Rubinsohn, RICS' chief economists, said: "Despite mounting concerns about both the macro environment and the war in Ukraine, for now the feedback to the RICS survey shows the housing market remains resilient. Rising interest rates have begun to push up the cost of mortgage finance but debt servicing remains low in a historic context which helps to explain why the new buyer enquiries indicator remains in positive territory."

The UK's housing market boomed during the pandemic, driven by a temporary cut to stamp duty and households reassessing their property needs with the ability to work from home. Activity has reduced from the frenzy of 2021 but many experts have been surprised by how long the market has stayed busy.

Rubinsohn said: "It is encouraging that a little more stock appears to be returning to the market. This is still early days in that inventory remains not far off historic lows but if the trend continues, it could help to create a better balance between supply and demand. That said, there is little evidence of this outcome materialising in the 12-month metrics which continue to point to further increases in prices and a flatter pattern in transactions."