A lack of supply is still constraining housing market activity, and pushing up prices

New buyer enquiries increased in February as supply slowly returned to the housing market.

According to the latest Royal Institution of Chartered Surveyors (RICS) residential market survey, new buyer enquiries increased from a net balance of 17 per cent to 14 per cent.

RICS’ survey scores are recorded on a net balance of -100 to 100, with a negative score indicating a decline in activity and a positive score suggesting a rise. 

The body said this was the highest reading since May 2021, when the measure reached a score of 25.

New listings improved from a reading of negative four per cent, up from negative seven per cent in January. This suggests housing stock was steadily recovering although the negative score indicated there was still a drop in homes coming to market.

Despite demand outstripping supply, agreed sales recorded its first positive reading since May last year with a positive score of nine per cent.

Respondents expect house prices to continue rising over the next three months amid a lack of supply. However, this is not expected to be as significant as previous months with a net score of 11 per cent, compared to a measure of 20 per cent in January.

Some 79 per cent of respondents said house prices had risen in February.

Simon Rubinsohn, chief economist at RICS, said: “Huge clouds of uncertainty hang over the economic prospects as energy prices continue to surge and the Bank of England grapples with how to manage monetary policy in this challenging environment.

“Despite all of this, there is little evidence yet that the mood music regarding the expectations for house prices or rents is shifting. Indeed, the medium-term projections from respondents to the RICS survey are continuing to gain momentum.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said despite modest improvements in stock levels, the lack of choice was constraining activity.

“The net result is a reduction in activity and softening – not correction – in prices due to the continuing shortage of houses in particular,” he added.

Tomer Aboody, director of MT Finance, added: “With the simple message of demand outstripping supply, house prices continue to rise although in a more modest fashion.

“With interest rates continuing to rise in order to curb inflation, buyers are looking to make their move as soon as possible in order to lock into affordable long-term mortgage deals.”

Via @YourMortgage