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UK estate agents are at their most optimistic about near-term growth in house prices in almost two years, according to a closely watched survey published on Thursday that also points to more properties coming on the market.
The Royal Institution of Chartered Surveyors said its 12-month house price expectations score, which measures the difference between the percentage of estate agents forecasting rises and falls in home 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 instructions to sell climbed 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 house price expectations remained in negative territory throughout 2023, Thursday’s report suggests that improvements in the latest data on house prices and mortgage approvals will continue.
Tom Bill, head of UK residential research at estate agency Knight Frank, said: “The economic data has fluctuated since Christmas but the direction of travel for the housing market is up as mortgage rates ultimately head in the opposite direction.”
Quoted mortgage rates have fallen from their peak last summer, helping the property market to recover from the squeeze of interest rates, which stand at a 16-year high of 5.25 per cent.
However, cheaper deals stalled last month as financial markets reassess expectations for Bank of England rate cuts this year.
The Rics index for house price performance over the past year rose to minus 10 from minus 18 in January — well above the minus 67 registered in September last year and the highest figure since October 2022.
John Frost, managing director at Slough-based estate agency The Frost Partnership, said: “The marketplace is just starting to wake up to the new year; this is possibly due to some confidence in the market with interest rates having now levelled and inflation . . . moving downwards.”
The survey also showed more positive trends in buyer inquiries; that index was positive at 6 for the second consecutive month in February, indicating an upward trend in buyer demand.
The index for agreed sales was lower than in January, but both readings indicated “a stronger trend in sales volumes than was evident through much of the past 12 months”, according to Rics.
Rics chief economist Simon Rubinsohn said the survey provided “some grounds for encouragement around the sales market, with not just buyer interest staying positive for the second successive month but also the uplift in new instructions to agents.
“The government will be hoping that this trend is given a boost by the change to capital gains tax announced in the Budget,” he added, in a reference to chancellor Jeremy Hunt’s decision to reduce what higher-rate taxpayers selling residential property pay from April.
There were signs of cooling in the still hot rental market. The Rics index tracking expectations of rental prices over the next three months remained high at 37, but it was down from an average of 53 last year.
Tenant demand also eased from its peak last July, while landlord instructions continued to dwindle.
“There are signs that the relentless upward trend in private rents is losing momentum but fresh demand is still comfortably outstripping supply in this area, which suggests there is unlikely to be any significant relief for tenants,” said Rubinsohn.
