"House prices are remaining at the record highs we’ve come to expect in the past 18 months and a lack of supply is underlying a sense of urgency up and down the property chain."
A net balance of +16% of respondents said they’d seen an increase in new buyer demand – up from +9% in December and the strongest reading since the height of the stamp duty holiday in May 2021. However, this was reported prior to the Bank of England’s decision in early February to increase interest rates.
New instructions fell further slightly, with this indicator remaining negative since April. That said, more market appraisals were reported by a net balance of +3% of those responding to the survey, the first time it has been above zero since June 2021.
The average time it takes to finalise a sale (from listing to completion) has now fallen to an average of sixteen weeks, down from seventeen weeks in September 2021 and the lowest since December 2019, indicating that sale speeds have nearly rebounded to their pre-Covid normal. Sales volumes are also reported as remaining steady during January.
Looking to the next three months, new sales expectations from respondents improved with the latest net balance up to +22%, representing a ten-month high. When looking at the next year, sales were expected to improve by +24% of respondents.
House prices in January also saw no sign of letting up, with a net balance of +74% of respondents seeing an increase. On a regional level, the most significant growth reported in property prices was focused in the North West and South East of England. All UK regions/countries are anticipated to see a further increases in house prices over the year ahead.
Simon Rubinsohn, RICS chief economist, said: “The increase in new market appraisals is an encouraging signal that more supply may be funnelled onto the market over the coming months, but it remains to be seen whether any uplift in this area is sufficient to match the resilient trend in demand.
“That said, there is an inevitable question mark over the impact of rising interest rates allied to the jump in the cost of living on homebuyer sentiment.”
“Notwithstanding these developing themes, for the time being the signals on the outlook for both prices and rents remains a little worrisome with the twelve-month RICS indicators for both at, or near, series highs.
“Moreover, this pattern is also being reflected in the metrics designed to capture the trends looking slightly further out.”
Emma Cox, sales director at Shawbrook Bank, commented: “2022 is already proving to be a runaway success for those looking to sell. House prices are remaining at the record highs we’ve come to expect in the past 18 months and a lack of supply is underlying a sense of urgency up and down the property chain.
“However, a long overdue shake up could be on the horizon with Michael Gove at the helm of housing policy. The highly anticipated 12 step levelling up agenda announced last week has committed to improving local infrastructure, transport links and introducing a Decent Homes Standard for renters. These are positive steps for the market – both for current and prospective homebuyers – and if Gove’s words turn into actions we could see a shift both in property hotspots and home ownership figures.
“For now though the market is acutely aware of the rising cost of living and a second consecutive increase to interest rates which will have a knock on effect on mortgage borrowing. Where possible buyers, and current mortgage holders, should ensure they are on the most competitive deal possible for their situation. While the market will remain complex, securing competitive terms now will offer greater protection against any unexpected changes amid rising inflation and wider market volatility.”
