House prices rise while rental demand takes a step back

House prices continued to grow in November, according to the latest RICS Residential Survey, with buyer demand maintaining an upward trend. The survey’s national house price indicator posted a figure of 25% in November, up from 16% in October. This marks the fourth consecutive monthly increase, further cementing the upward trajectory of house price growth observed since the summer. Respondents to the survey said they expected house prices to continue rising over the next three to 12 months, reflecting a robust outlook for the year ahead. New buyer enquiries maintained positive momentum, recording a net balance of 12%; largely unchanged from the previous month and highlighting a modest but sustained recovery in buyer demand. However, agreed sales volumes remained broadly flat, with a net balance of 1% compared with 8% in October. Looking ahead, a net balance of 19% of respondents said they expected an increase in sales activity over the next three months. Supply-side trends were also positive, with new instructions rising for the fifth consecutive month. Market appraisals in November were on a par with levels seen a year ago, which the RICS said could signal a potential slowdown in the pipeline of new listings as we move into 2025. In the lettings market, tenant demand declined slightly in November, with a net balance of -1%, marking the first decline since 2020. Landlord instructions also continued to fall, with a net balance of -13%. Despite the slower demand backdrop, rental prices are forecast to edge higher, with a net balance of 29% of respondents expecting increases in the near term. RICS senior economist Tarrant Parsons said: “Although the latest survey results continue to signal a steady improvement in buyer demand across the residential market, the broader macro environment is likely to pose additional headwinds moving forward. Most significantly, the recent rise in mortgage interest rates may curtail the recovery in market activity before long, and this is reflected in the slightly less optimistic sales expectations data coming through this month. He added: “Moreover, measures of consumer and business confidence across the economy have deteriorated of late and, if sustained, this could begin to feed through into housing market conditions in the months ahead.” Image © Honey