UK housing market sees 'little bit of respite' after challenging year

18 January 2024 , 10:09

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There are signs that the downturn in the housing market is bottoming out (Image: PA Archive/PA Images)

The housing market has seen a bit of relief in recent weeks after a tough year, say surveyors.

New buyer inquiries are starting to level out after dropping in the past few months, according to a December 2023 report from the Royal Institution of Chartered Surveyors (Rics). While the number of newly agreed sales is still on the decline, it's at its least negative since March 2022, Rics' survey of property professionals found.

They're predicting a strong recovery in home sales volumes in 2024. It now takes an average of 18 weeks to complete a sale, down from 20 weeks in September 2023, the report said.

House prices continued to drop in December, but the downward pressure on prices is easing, according to Rics. Looking ahead to the next three months, prices are expected to keep falling slightly, before stabilising by the end of the year.

The latest feedback on house price expectations remains mixed across the UK, with professionals in Northern Ireland, the north west of England and Scotland expecting higher prices in 12 months, the report said. In the rental sector, demand from tenants increased over the month.

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A shortage of properties available on the lettings market continues to drive up rental prices, Rics said. The report suggests that over the next year, rents could increase by nearly 4%, and rental growth could average 5% per year over the next five years.

Rics senior economist Tarrant Parsons commented: "It appears recent weeks have seen a little bit of respite emerge. Supported by an easing in mortgage interest rates of late, buyer demand has now stabilised, and this is expected to translate into a slight recovery in residential sales volumes over the coming months. Nevertheless, the lending climate is set to remain restrictive compared to much of the post-global financial crisis era next year, meaning any uplift in activity is likely to be limited for the time being."

Tom Bill, head of UK residential research at Knight Frank, said: "The predictable result of mortgage lenders dropping their rates is that demand has increased and price declines in the UK housing market appear to have bottomed out. We expect UK prices to rise by 3% this year and sales volumes to increase from a low base in 2023 as the economic convulsions of recent years fade."

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Lawrence Matheson