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UK housing market sees ‘respite’ as mortgage rates ease

According to surveyors, the housing market has had some “respite” in recent weeks as activity picked up amid easing mortgage rates after a challenging 2023.

Inquiries from new buyers are approaching a flatter trend after falling in recent months, according to the December report from the Royal Institution of Chartered Surveyors (Rics).

While still falling, the volume of newly agreed sales has been at its least negative since March 2022, Rics’ survey of property professionals found.

Professionals predicted a solid recovery in home sales volumes emerging in 2024.

The report said it also now takes 18 weeks on average to complete a sale, compared with 20 weeks back in September 2023.

House prices continued to follow a downward trend in December, but the negative pressure on prices is diminishing, Rics said.

Looking to the three months ahead, prices are expected to continue edging downwards before stabilising by the end of the year.

The report said that long-term projections point to a near-4% increase in rents over the year ahead and for rental growth to average 5% over the next five years.

Rics senior economist Tarrant Parsons said: “With 2023 proving to be a particularly challenging year for the UK housing market, it appears recent weeks have seen a little bit of respite emerge.

“Supported by an easing in mortgage interest rates of late, buyer demand has now stabilised, and this is expected to translate into a slight recovery in residential sales volumes over the coming months.

“Nevertheless, the lending climate is set to remain restrictive compared to much of the post-global financial crisis era next year, meaning any uplift in activity is likely to be limited for the time being.”

Tom Bill, head of UK residential research at Knight Frank, said: “The predictable result of mortgage lenders dropping their rates is that demand has increased and price declines in the UK housing market appear to have bottomed out. We expect UK prices to rise by 3% this year and sales volumes to increase from a low base in 2023 as the economic convulsions of recent years fade.”

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