UK Housing Market: A Tale of Two Takes, But Signs Point to Recovery

The UK housing market has been a source of conflicting narratives over the past year. Headlines have ranged from "Crash Imminent!" to cautious optimism. To navigate this uncertainty, let's delve deeper into a recent survey by the Royal Institution of Chartered Surveyors (RICS) released on March 14, 2024.

Signs of Resilience and Growth:

The RICS survey offers promising data. It measures surveyor sentiment on house prices, essentially asking if they expect prices to rise or fall. The results are encouraging:

• Less negativity: February 2024's survey score of -10 indicates a significant improvement from -18 in January. This marks the least negative reading since October 2022 and the sixth consecutive month of improvement.
• London's turnaround: London's market shows an even more dramatic shift. The price indicator went from a rock-bottom -68% in September 2023 to a positive +5% in February, suggesting a clear upward trend.
• Positive outlook: Looking ahead, a net balance of +36% of surveyors across England and Wales believe house prices will rise within the next year, a significant jump from +18% last month.

Challenges Remain, But Optimism Prevails:

While the RICS survey paints a positive picture, some factors suggest caution:

• Economic headwinds: Sluggish economic growth, high mortgage rates compared to recent years, and reduced discretionary income due to the ongoing cost of living crisis could still lead to a slight price correction.
• Uncertainty lingers: We'll need to wait for official Land Registry data later this year to confirm these findings.

What Experts Are Saying:

Halifax Price Index and Nationwide House price index B echo the RICS survey's optimism. They see rising wages and falling inflation as positive indicators for the housing market, though not a complete turnaround yet.

What This Means for You:

• Market stabilization: The RICS survey, coupled with observations from financial institutions, suggests a shift away from the downward trend.
• Potential price increases: While not guaranteed, house prices could see a modest rise due to wage growth and inflation moderation.
• Mortgage considerations: Mortgage rates, though not at record lows, might adjust based on changing house prices. Consulting a financial advisor is crucial.
• Stay informed: Keep an eye on economic news and indicators like GDP growth and interest rate changes. These influence the overall health of the housing market.

The Bottom Line:

The UK housing market, despite recent storms, appears to be on the road to recovery. The RICS survey offers a compelling narrative of resilience and growth, particularly in London. However, a cautious approach is still advisable. Do your research, seek professional advice, and stay informed about economic developments before making any significant decisions. Remember, a stable and well-informed approach is key to navigating the ever-evolving dynamics of the property market.

Dariusz Karpowicz

Albion Financial Advice

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