Further recovery for UK Residential sector expected in 2024

The January 2024 RICS UK Residential Market Survey demonstrated further improvements in key metrics across the board. In particular, the outlook for sales volumes over the next twelve months improved, influenced by expectations of future interest rate cuts by the Bank of England.

Nationally, new buyer enquiries were at +7% in January, up from -3% in December. This result is consistent with a gradual recovery for buyer demand, and while relatively modest, it is the strongest demand since February 2022. Further to this, agreed sales also saw a rise in sentiment, tilting positive from -5% previously to +5%. Even more encouragingly, respondents see sales picking up over the next three months, with +14% on balance stating that they believe rises are coming. Longer-term, the positivity increases with +44% believing that sales volumes will increase over the next twelve months.

House prices at a national level returned a result of -18%, indicating continuing price falls overall. However, this result has strengthened for five successive months, and is the strongest reading since October 2022. London stands out as exhibiting a more stable trend for prices this month. Likewise, respondents based in Scotland and the North West of England cited a generally flat picture in recent months. RICS Senior Economist, Tarrant Parsons, said:

“The UK housing market has seen a continued improvement in buyer activity through the early part of the year, supported by the recent easing in mortgage interest rates. Although sales volumes through much of the year ahead are likely to remain relatively subdued compared to the longer-term average, the outlook has now turned modestly brighter on a consistent basis over the past few survey reports.

However, this is not to say that mortgage affordability isn’t still a significant challenge, and any further unwelcome surprises with regards to inflation may still cause interest rate expectations to be revised. That would then pose a significant risk to any prospective recovery in the months ahead, even if the current prognosis is for the market to see a further pick-up in activity levels.”

What’s more, recent market activity released by Twenty7tec has revealed that Monday was the busiest every day on  record for mortgage searches. Purchase mortgage searches were up  120.1% in January 2024 compared to December 2023 and were up 13% compared to January 2023. Remortgage searches were also up 93.9% compared to December 2023 and were up 26.8% compared to January 2023.

Buy To Let mortgage searches were up 96.5% nationwide in January 2024 compared to December 2023 and were up 5.2% compared to January 2023. Additionally, searches by First Time Buyers were up 125.9% nationwide in January 2024 compared to December 2023 and were up 16.9% compared to January 2023.

Also, two-year fixed mortgages accounted for 49.51% of all fixed product searches (compared to 40.7% in January 2023). Three- to five-year fixed mortgages accounted for 31.04% of all fixed product searches (compared to 33.9% in January 2023) and five- to ten-year fixed mortgages now account for 19.45%, a rise on the prior month  (compared to 25.4% in January 2023). Nathan Reilly, director at Twenty7tec, said:

“January 2024 saw us move into new territory: our first-ever month with over two million mortgage searches on our platform. It was consistent growth across the board with purchase, remortgages and Buy To Let all doubling compared to the prior month. It was officially our busiest month ever and we saw 12 of our 20 busiest ever days for mortgage searches in January 2024.

The total searches for purchase mortgages were the second busiest ever, behind a stamp-duty-holiday-driven set of figures in March 2021. In real terms, it was also the busiest-ever month for first-time buyers, but they lagged as a group as a proportion of all searches. We also saw the lowest level of 90%+ mortgage searches for a year. But, as I say, in real terms, searches by First Time Buyers were considerably up including doubling in London compared to December 2023.

Total product availability remains stable, but we had our busiest-ever month for adjustments to products last year. We’re now at 95.04% of the product availability peaks we last saw in March 2020. Finally, sole traders drove a lot of activity as their tax year ended on 31st January 2024. Six of the ten busiest days ever for self-employed took place in January 2024, and overall, it was our busiest ever for the self-employed too.”

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