A survey by the Royal Institution of Chartered Surveyors highlights a renewed sense of optimism among property professionals. This hope for a rebound in house sales, along with expected market adjustments, creates an interesting outlook.
Current Optimism in the Property Sector
Expectations for a resurgence in house sales among property professionals are noted as the strongest since January 2022, as highlighted by recent survey data from the Royal Institution of Chartered Surveyors (RICS). A net balance of 20% of professionals predicts a rebound in home sales within the upcoming three months, which marks a positive shift in market sentiment. This renewed confidence could lead to increased market activity and enhanced opportunities for both buyers and sellers.
Challenges with House Prices
Yet, despite this optimism, house prices are expected to rise, posing a potential challenge for the next government. With a 54% balance of professionals anticipating surging prices over the next year, the RICS stresses the difficulty of increasing housing supply. Concurrently, Britain’s leading banks have started to reduce mortgage rates, providing some relief to homeowners and potentially stimulating the housing market.
Economic Considerations
Forecasts from economists suggest that the Bank of England might cut its base rate from 5.25% to 5%, aiming to stimulate economic growth. This anticipated decision is expected to soften lending rates further, making home financing more accessible. However, the housing market activity remained subdued last month, as noted by Tarrant Parsons, RICS’ senior economist, who stated that forward-looking aspects showed slight improvements. Emerging factors could support a market recovery in the forthcoming months, depending on the broader economic landscape.
Trends in the Rental Market
In parallel, the rental market is experiencing various pressures. A 28% net balance of professionals reported increased tenant demand in June, whereas an 11% balance noted a decline in new landlord instructions. This discrepancy suggests a tightening in the availability of rental properties. Looking forward, a net balance of 38% of survey participants predicts an increase in rental prices over the next quarter, reflecting the current imbalance between demand and supply.
Impact of the Political Climate
The recent election has impacted consumer sentiment in the property and rental markets. Sarah Coles, head of personal finance at Hargreaves Lansdown, comments on the change, noting June’s adverse conditions with falling sales and prices prior to the election. The new government appears to have injected some optimism into the market, with hopes that this political transition will enhance consumer confidence and catalyse an increase in buyer numbers.
Consumer Spending Trends
Barclays’ analysis of spending on rent and mortgages showed an annual increase of 1.5% in June, the lowest growth rate since March 2023. This data coincides with a decline in home improvement spend, down by 9.4% year-on-year, while garden centre purchases decreased by 12.7%. The summer weather might encourage a rise in spending on home enhancements, unlocking pent-up demand.
Advice for Renters and Landlords
Phil Spencer, a TV property expert, advised renters to make their applications stand out to secure desired accommodation, amid fierce competition. He further advised landlords to invest in their properties to attract stable tenants, suggesting that a proactive approach might reduce long-term costs by maintaining occupancy and minimising repairs.
The property market is facing a complex landscape with optimism tempered by economic and political dynamics. However, strategic decisions by both the government and financial institutions could catalyse a recovery.
