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UK estate agents are more optimistic about near-term growth in house prices in almost two years, according to a closely watched survey released on Thursday that also indicates more properties coming to market.
The Royal Institution of Chartered Surveyors said its 12-month house price expectations score, which measures the difference between the proportion of estate agents forecasting increases and decreases in house prices, doubled to 36 last month compared to to January 18th.
The reading – the highest since June 2022 – came as the trade body said a separate index tracking new sales instructions rose to 21 in February, the best figure since October 2020.
The professional body’s survey is closely monitored as a timely measure of the property market. After home price expectations remained in negative territory throughout 2023, Thursday’s report suggests that improvements in the latest data on home prices and mortgage approvals will continue.
Tom Bill, head of UK residential research at estate agency Knight Frank, said: “Economic data has fluctuated since Christmas but the direction of travel for the property market is up as mortgage rates ultimately head towards in the opposite direction.”
Listed mortgage rates have fallen from their peak last summer, helping the housing market recover from the interest rate squeeze, which stands at 5.25%, a 16-year high.
However, cheaper trades stalled last month as financial markets reassessed expectations for Bank of England rate cuts this year.
The Rics index relating to the trend of house prices over the last year rose to minus 10 from minus 18 in January, well above the minus 67 recorded in September last year and the highest value since October 2022.
John Frost, managing director of Slough-based estate agency The Frost Partnership, said: “The market is just starting to wake up to the new year; this is probably due to a certain confidence in the market, with interest rates now leveled and inflation. . . going downwards.”
The survey also showed more positive trends in shopper inquiries; the index was positive at 6 for the second consecutive month in February, indicating an upward trend in buyer demand.
The agreed sales index was lower than in January, but both readings indicated “a stronger trend in sales volumes than was evident in much of the last 12 months”, according to Rics.
Rics chief economist Simon Rubinsohn said the survey provided “some cause for encouragement for the sales market, not only with buyer interest remaining positive for the second consecutive month, but also with the increase of the new instructions to the agents.
“The Government hopes this trend will get a boost from the change to capital gains tax announced in the Budget,” he added, in reference to Chancellor Jeremy Hunt’s decision to reduce the amount paid by higher-rate taxpayers selling residential properties to starting from April. .
On the rental market, which is still hot, there have been signs of a cooling off. The Rics index measuring rental price expectations over the next three months remained high at 37, but down from the average of 53 last year.
Tenant demand has also fallen from its peak last July, while landlord instructions have continued to decline.
“There are signs that the continuing upward trend in private rents is losing momentum, but new demand is still well outpacing supply in this area, suggesting there is unlikely to be significant relief for tenants.” , Rubinsohn said.