The UK housing market is showing signs of recovery following the Autumn Budget, with increased sales, buyer interest, and a promising outlook for 2024.
- In October, estate agents reported more sales compared to September, driven by a rush to complete transactions before possible tax changes.
- There was a notable uptick in buyer inquiries for the fourth month in a row, showing growing interest in the market.
- An increase in new listings suggests a strengthening pipeline, reflecting improved confidence among sellers.
- Despite potential challenges from rising bond yields impacting mortgage rates, the sentiment remains optimistic for future market activity.
Despite concerns prior to the budget announcement, the UK’s housing market performance exceeded expectations, according to a survey by the Royal Institution of Chartered Surveyors (RICS). Out of 269 estate agents polled, most reported an increase in sales for October over September. The surge seems to have been partly fueled by buyers eager to finalize deals ahead of anticipated tax changes.
Although some agents noted a slowdown in activity just before the budget on October 30, the overall mood was positive. Simon Milledge of Jackson-Stops in Dorset mentioned a significant wave of exchanges and completions, likely motivated by the timing of the budget. Similarly, John King from Andrew Scott Robertson in London attributed the October activity surge to extensive media coverage on potential tax increases and a decrease in mortgage rates.
A slight pause was observed before the budget, but Ian Perry from Perry Bishop in Cheltenham reported that the market is gaining momentum again. Looking forward, 34% of estate agents expect to sell more homes in the next three months, with even higher confidence regarding activity levels for the next year.
The survey also indicated a continued rise in buyer inquiries for the fourth consecutive month. This has been complemented by an increase in new property listings, creating what RICS describes as a ‘relatively solid’ pipeline for the near term. This improvement is also reflected in 16% of respondents who now believe house prices are increasing, marking a shift from previous perceptions of static prices.
Tarrant Parsons, head of market analysis at RICS, pointed out the momentum in buyer demand, which is translating into more sales agreements. The forward-looking view suggests this upward trend will continue in the coming months. However, Parsons cautioned about the potential risks posed by rising bond yields, which could affect mortgage rates in the near term.
On the rental front, tenant demand remained strong over the summer, but supply issues have become more pronounced. With 29% of letting agents noting a decrease in landlord instructions, there is significant pressure on the rental market. As a result, rents, which are already at record highs, are expected to keep climbing, further tightening the market for tenants.
The UK housing market is on a positive trajectory, driven by buyer demand and market confidence, despite some short-term challenges in mortgage rates.
