The latest RICS UK Residential Property Survey, out today, reports growing activity in the housing market – but it gives a warning about the wider economy.
In the lettings sector, tenant demand has stabilised however, respondents expect further rent rises (+37% in December).
RICS says this is likely due to a continued trend of landlords placing their properties for sale (net balance +37% from +29% in November.) leading to a lack of supply for tenants.
So whilst demand is broadly flat, supply is diminished, leading to a lack of available property to rent and price rises.
House sales continue to see an upward trend with +5% (net balance) of respondents reporting an increase in new buyer enquiries.
While this is down from the +11% readings posted in November and October, sales volumes have picked up with a net balance of +7% of respondents indicating sale growth, compared to a figure of +1% in November.
New instructions, which measures properties placed for sale, saw a bounce, potentially due to stamp duty changes in March, with a net balance of +14% reported.
This is the sixth consecutive month where respondents have indicated an increase in houses being listed for sale.
House prices are now rising in every region of the UK. Northern Ireland and Scotland report the strongest price growth currently.
The institution says rising gilt yields present a potential challenge for the housing market over the coming months although for now at least, respondents to the survey remain reasonably upbeat about the medium-term outlook.
RICS Chief Economist, Simon Rubinsohn, says: “The latest results from the RICS Residential Market Survey points to a further improvement in sentiment in the housing market despite concerns about the potential impact of rising bond yields on borrowing costs. Buyer enquiries rose once again, albeit at a slower pace than in November, and the headline price indicator also moved higher.
“More significantly, the signals from the survey around expectations over the next twelve months also remain solidly positive for now.
“However, the resilience of the uplift in market mood could be tested if the mortgage rates do begin to climb in a material way over the coming months. That, critically, would also be a concern for developers who will want to see a solid market as a backdrop for ramping up housebuilding to help meet the government’s ambitious 1.5 million homes target for this parliament.”