Stay informed with free updates
Simply sign up for myFT Digest of UK house prices – delivered straight to your inbox.
UK estate agents are more optimistic about near-term growth in house prices in about two years, according to a closely watched survey published on Thursday that also points to more properties coming onto the market.
The Royal Institution of Chartered Surveyors said its 12-month house price forecast, which measures the difference between the percentage of estate agents anticipating a rise and fall in house prices, doubled to 36 last month from 18 in January.
The reading – which was the highest since June 2022 – came as the professional body said a separate index tracking new selling instructions rose to 21 in February, the best number since October 2020.
The survey conducted by the professional body is closely monitored as a timely measure of the property market. After house price expectations remained in negative territory throughout 2023, Thursday's report indicates that the improvement in the latest data on house prices and mortgage approvals will continue.
“Economic data has been volatile since Christmas, but the direction of travel for the housing market is up as mortgage rates finally head in the opposite direction,” said Tom Bell, head of UK housing research at real estate agency Knight Frank.
Mortgage interest rates have fallen from their peak last summer, helping the real estate market recover from the pressure on interest rates, which reached a 16-year high of 5.25 percent.
However, cheaper deals faltered last month as financial markets reassessed the Bank of England's expectations for interest rate cuts this year.
The Rics house price performance index rose over the past year to minus 10 from minus 18 in January – well above the minus 67 recorded in September last year and the highest number since October 2022.
John Frost, managing director at Slough-based estate agency The Frost Partnership, said: “The market is just starting to wake up to the new year; This may be due to some confidence in the market with interest rates and inflation now stable. . . “Moving down.”
The survey also showed more positive trends in buyer inquiries; This indicator was positive at 6 for the second consecutive month in February, indicating an upward trend in buyer demand.
The consensus sales index was lower than in January, but both readings indicated a “stronger trend in sales volumes than has been evident over most of the past 12 months,” according to Rics.
Simon Robinson, chief economist at Rics, said the survey provided “some reasons for encouragement in the sales market, with not only buyer interest remaining positive for the second month in a row, but also a rise in new instructions to agents”.
“The Government hopes this trend will be reinforced by the change to capital gains tax announced in the Budget,” he added, referring to Finance Minister Jeremy Hunt’s decision to reduce what high-rate taxpayers selling residential properties pay from April. .
There have been signs of a slowdown in the still hot rental market. The Rics index, which tracks rental price expectations over the next three months, remained high at 37, but fell from an average of 53 last year.
Demand for tenants has also declined from its peak last July, while landlord instructions continue to wane.
“There are signs that the ongoing upward trend in private rents is losing momentum, but new demand still comfortably outstrips supply in this area, suggesting there is unlikely to be any significant relief for tenants,” Robinson said.
