The RICS UK residential property survey for January 2025 signalled a broadly flat picture for house demand and sales. Despite this, survey respondents foresee the market picking up later in the year.
The new buyer enquiries indicator returned a net balance of zero, which means that interest in home buying neither increased nor decreased. Agreed sales were up by a net balance of +3%, which is very marginal in terms of growth.
The future outlook for sales looks somewhat stronger, with the three-month look ahead for sales giving back a +10% result on balance. Indeed, the further you look forward, the more positive things get – +30% net balance is recorded for twelve months from now.
Residential property prices continue to rise across the country, with +22% net balance responses indicating rises over the month. Northern Ireland and the North West of England seeing the strongest momentum at present. On the flipside, price growth appears more modest across Yorkshire & the Humber and the South East for the time being. Respondents firmly believe that house prices will continue to rise across the country over the next twelve months (+55%).
In the lettings market, demand continued to falter with a +2% result, indicating marginal growth, very close to a flat picture. On the other hand, landlord instructions, which is to say landlords making property available for rent continued to reduce (net balance -19%). So despite demand recording broadly flat to marginal growth, further reductions in availability continues to increase the gap between supply and demand. Unsurprisingly, a net balance of +23% believe that rents will continue to rise over the next three months.
Many in January expected some form of rate cut by the Bank of England in February and it will be interesting to see the impact of the recent change in February’s report.
RICS head of market analytics, Tarrant Parsons, said: “The latest survey feedback indicates that growth in buyer demand lost a bit of momentum through the early part of the year, with this flatter picture likely linked to the turbulence seen across money markets in the first half of January.
“Nevertheless, moving forward, respondents continue to envisage a slightly positive near-term outlook for sales activity. This should be further supported by the unwinding of some of the pressures around mortgage interest rates over the past couple of weeks.”
Reflecting on the latest data from RICS, Tom Bill, head of UK residential research at Knight Frank, commented: “Downwards pressure on mortgage rates has increased slightly over the last month as inflationary jitters ahead of Donald Trump’s inauguration recede. Supply has been relatively strong as sellers decide to act after the political disruptions of 2024 and ahead of April’s stamp duty increase. The return of sub-4% mortgages would strengthen demand, which means a lot hinges on how much financial headroom the government can find and how the UK fares as global trade wars escalate.”
