The UK housing market continues to show resilience, with house price growth accelerating for the fourth consecutive month in November, according to the latest Royal Institution of Chartered Surveyors (RICS) residential survey. This positive trend persists despite the upward pressure of mortgage interest rates.
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Continued Growth Amidst Rising Interest Rates
The RICS national house price indicator saw a notable 5% increase in November, building on the 16% rise recorded in October. This sustained growth since the summer months points to a robust housing market, defying expectations in the face of rising borrowing costs. Buyer demand also remained strong, further reinforcing the positive momentum. RICS survey respondents expressed optimism for the future, anticipating continued price increases over the next three and twelve months. This positive outlook suggests a strong foundation for the housing market in the coming year.
New buyer enquiries held steady at 12% in November, indicating sustained interest in property acquisition. Furthermore, 19% of surveyed professionals predict a rise in sales activity in the coming quarter. However, a potential slowdown in new listings entering the market in 2025 is hinted at by November’s market appraisals, which remained at levels comparable to the previous year.
Rental Market Shows Signs of Cooling
While the sales market thrives, the rental sector exhibited signs of cooling. For the first time since 2020, tenant demand experienced a slight dip in November. A modest 1% of professionals reported a decrease in rental demand, possibly attributed to seasonal fluctuations. This shift may indicate a potential easing of pressure in the rental market, although further data is needed to confirm a sustained trend.
Economic Headwinds and Future Outlook
Tarrant Parsons, Senior Economist at RICS, acknowledges the positive trends in buyer demand but cautions about potential challenges ahead. He highlights the impact of rising mortgage interest rates, suggesting they could dampen the market recovery. Declining consumer and business confidence further adds to the uncertainty surrounding the housing market’s trajectory in the coming months.
Rightmove, a leading UK property portal, forecasts a 4% increase in average UK property values by the end of 2025, offering a more optimistic long-term perspective. However, navigating the complexities of rising interest rates and fluctuating economic conditions will be crucial for sustained growth in the UK housing market. The interplay of these factors will determine whether the current momentum can be maintained in the face of potential headwinds.
