Positive five-year forecast for UK house prices from the Royal Institution of Chartered Surveyors Yorkshire News

The latest Royal Institution of Chartered Surveyors reveals a positive five-year forecast for house prices, along with a spring surge in the number of homes coming on the market.

The latest RICS Residential Market Survey shows that the number of new homes listed for sale has risen for the first time in twelve months, despite continued caution about rising cost of living and higher interest rates. In March, 8% of respondents reported an increase in the volume of new listings entering the sales market. Inquiries from new buyers also increased this month with 9% of respondents reporting an increase. This is the first time since the pandemic that the survey metrics for supply and demand have been so aligned.

Although the small increase in the number of new listings available is encouraging, the average number of properties on real estate agents’ books remains near all-time lows. The number of agreed sales was unchanged from February, with an increase of 9%, indicating a steady upward trend in the number of transactions.

This continued moderate increase in housing market activity leads respondents to anticipate the same for the near term. Looking ahead to the next three months, sales expectations remain positive with 16% of taxpayers expecting an increase. Looking to this point next year, sales volumes look broadly flat with 2% anticipating an increase.

Despite somewhat more encouraging news on the supply front, house prices continue to rise at a steady pace. This month, 74% of respondents saw an increase in house prices and it is almost identical to the average seen in the last twelve months. Northern Ireland, Wales and the North of England also continue to see the steepest increase in house prices.

Looking ahead, respondents expect house prices to rise further in the next three to twelve months. Looking ahead to the next five years, survey contributors expect home prices to rise about 4% annually.

In the rental market, for the first time since July 2020, the instructions of the owners rose. However, demand continues to increase at a solid pace, with 54% of respondents citing an increase in March. While more properties are being put up for sale, demand continues to outstrip supply and expectations for rental growth remain high with 64% of respondents predicting an increase, the strongest reading on record. Looking ahead, taxpayers expect rents to increase 4% over the next twelve months and 5% each year when looking at five-year projections.

RICS Chief Economist Simon Rubinsohn says: “Despite growing concerns about the macroeconomic environment and the war in Ukraine, for now the RICS survey feedback shows that the housing market remains resilient. Rising interest rates have started to push up the cost of mortgage financing, but debt service remains low in a historical context that helps explain why the new home buyer inquiries indicator remains in positive territory.

“Meanwhile, it’s encouraging that a few more stocks seem to be making their way back onto the market. We are still in the early days where inventory is not far off record lows, but if the trend continues it could help create a better balance between supply and demand. That said, there is little evidence that this result will materialize in the twelve-month metrics that continue to point to further price increases and a flatter pattern in transactions.”