The UK property market is showing signs of stabilization as house price declines ease, according to a recent survey conducted by the Royal Institution of Chartered Surveyors (RICS).
The survey indicates a more optimistic outlook for the market following a surge in mortgage costs. In this blog, we delve into the survey results and explore the factors contributing to the market's improvement.
A Promising Trend: The RICS survey revealed that the house price balance, which measures the difference between surveyors observing price rises and falls, improved to minus 39 in April from minus 43 in March. This represents the highest figure in five months, demonstrating a positive shift. Additionally, respondents expressed less pessimism about future house prices, with expectations for the year ahead rising to minus 16 in April compared to minus 24 in March. These figures are a substantial improvement from the lows experienced in November last year.
The data from RICS aligns with recent findings from Nationwide, a mortgage provider, which reported a 0.5% increase in house prices between March and April. The Bank of England also noted a five-month high in mortgage approvals for March. These figures collectively suggest a more stable environment for the housing market.
Cost Considerations: Borrowing costs have eased since their peak in the autumn of the previous year when the announcement of unfunded tax cuts in the "mini" Budget created uncertainty. However, mortgage rates are still higher than pre-September 2022 levels. Nevertheless, consumers on fixed-rate deals are benefiting from the easing expectations of longer-term interest rates.
First-Time Buyers in Focus: The first-time buyer section of the market is experiencing noteworthy activity. Rightmove, the property portal, reported a record average asking price of £224,963 for properties popular with first-time buyers. Despite higher mortgage rates impacting affordability, sales in this segment have increased by 4% compared to March 2019. This positive trend is seen as beneficial for the overall market health.
Conclusion: The recent survey by RICS offers encouraging signs of stability in the UK property market. While challenges persist, the easing of house price declines, improved future expectations, and increased activity among first-time buyers indicate positive shifts. The market continues to adapt to changes in borrowing costs and acknowledges a new lending landscape.