The property sales market continues to strengthen, according to the latest Royal Institution of Chartered Surveyors (RICS) survey.
House prices rose last month, with all regions reporting price growth apart from Yorkshire and the Humber, and the South West.
Estate agents saw an increase in new buyer enquiries, extending a run of growing demand to four consecutive months.
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An increase in people looking to buy a house has helped push up prices.
Last week, Halifax said house prices had reached a record high, with the average UK property costing £293,999. Meanwhile, the estate agency Savills predicts that house prices in the UK will increase by almost a quarter by 2029.
Respondents to the RICS survey were also upbeat about the future, with a net balance of +20% of respondents believing that house prices will continue to rise over the next three months, up from +12% in September.
Virtually all parts of the UK are expected to see a rise in house prices in the year to come, led by firm growth across Northern Ireland and Scotland.
RICS noted that its October survey may have been impacted by respondents waiting to see what would be announced by the chancellor in the Autumn Budget.
Given there were no nasty surprises for the property market, this could improve sentiment in future surveys.
According to RICS, there could also be more sales and a boost to house prices due to the Bank of England’s interest rate cut last week, and also upcoming stamp duty changes.
Tina Paillet, RICS president, comments: “The growth in residential sales could be further supported by recent interest rate announcements by the Bank of England.
“Meanwhile, the pending expiration in the higher stamp duty threshold in spring 2025 may cause homeowners and first-time buyers to rush to take advantage of the current rate, but this will likely be followed by a weaker trend after the deadline has passed.”
Despite the interest rate cut, there hasn’t been a universal drop in mortgage rates. Some lenders have hiked rates, while others have lowered them. However, the Bank of England is expected to trim rates again next year, so mortgage costs could eventually drift lower.
At the moment, the rise in bond yields following the Budget - and the impact on mortgage rates - “will likely present something of a headwind for the market to contend with over the short term”, according to RICS.
What’s the outlook for renters?
The picture is not as rosy for renters, though. Woes for tenants persist as rental properties continue to disappear from the market and demand remains resilient in most regions.
A net balance of +19% survey respondents reported increasing tenant demand over the three months to October.
At the same time, landlord instructions, which is the metric measuring landlords making their property available for rent, fell over the same timeframe. This is evidenced by a net balance reading of -29%, which is its weakest reading since the end of 2021.
Unsurprisingly, a net balance of +33% of respondents expects rental prices to be driven higher over the coming three months, due to this mismatch between supply and demand.
According to Rightmove, the average advertised rent hit another record high last month as landlords exited the buy-to-let sector amid fears of capital gains tax hikes in the Autumn Budget.
Paillet at RICS comments: “Our data continues to indicate that renters are feeling the pressure from a limited supply of rental properties and rising rents.
"While the Autumn Budget announcement of immediate stamp duty increases for landlords acquiring rental properties may increase opportunities in supply for owner-occupiers, it will make it more challenging to address the critical shortage of rental homes.”
Chancellor Rachel Reeves increased the stamp duty surcharge on second homes from 3% to 5% in her maiden Budget.
Wondering whether it’s better to rent or buy? We look at the costs and analyse the pros and cons in Buying vs renting: as mortgage rates drop, which is cheaper?
