UK estate agents report third consecutive monthly rise in demand

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UK estate agents are becoming increasingly optimistic about the housing market, reporting a third consecutive monthly rise in demand as prices have stabilised, according to a closely watched survey.

The Royal Institution of Chartered Surveyors said its members had seen an increase in new inquiries in March. The difference between the percentage of estate agents reporting a rise in buyer interest versus those recording a drop climbed to 8 points, double the reading of the previous month and the highest reading since February 2022.

The survey also found sustained improvements in the outlook for house prices with that index reaching 38, up from 36 in February and the highest level since June 2022, while supply continued to rise with a fourth consecutive positive reading for new listings.

“Demand continues to recover gradually across the UK housing market, with new buyer inquiries rising for a third month in succession,” said Tarrant Parsons, senior economist at Rics. 

“With the inflation backdrop turning a little less difficult of late, this has led to expectations that the Bank of England will be able to start lowering interest rates later in the year. This should continue to support the market to a certain degree going forward,” he added.

Data out last week from the Bank of England showed that mortgage approvals rose to a 17-month high in February as the effective interest rate paid on new home loans fell to its lowest level since August.

But the latest survey showed a decline in agreed sales, with the reading falling to minus 5, down from minus 4 in February.

Although the housing market has seen a steady recovery in recent months — with prices and sales broadly rising over the past two quarters as mortgage rates have fallen from their peak in the middle of last year — there is still some volatility in the data.

Figures from Halifax last Friday showed house prices declining for the first time in six months, contrary to expectations.

Jeremy Leaf of Jeremy Leaf & Co, an independent lettings and estate agent in London, suggested the downward pressure on prices was owing to the lag between increasing supply and new inquiries.

“The recent increase in listings has meant some buyers are spoilt for choice, which has led to hard bargaining and price softening,” he said.

Andrew Wishart, senior economist at Capital Economics, said some potential buyers were probably waiting on the BoE to cut rates. “As we get towards cuts in the bank rates and mortgage rates falling later this year, that will improve affordability, pricing even more people back in the market,” he said.

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