RICS Residential Market Survey (Feb.) - Capital Economics
UK Housing

RICS Residential Market Survey (Feb.)

UK Housing Market Data Response
Written by Andrew Wishart

The rebound in the RICS survey balances in February suggest that home sales were sustained at a very high level even before further policy support was announced in the Budget. Strong sales and limited stock point to further house price gains in the near term.

Survey points to further gains in house prices

  • The rebound in the RICS survey balances in February suggest that home sales were sustained at a very high level even before further policy support was announced in the Budget. Strong sales and limited stock point to further house price gains in the near term.
  • At first glance, some of the headline balances were not particularly impressive. Despite improving, the new buyer enquiries balance remained in negative territory in February. (See Table 1.) Remember, though, that the balance compares this month to last when activity was already very strong. Mortgage approvals were up 40% y/y in January. And while the newly agreed sales balance only increased from -17% to +1%, the number of sales per surveyor recovered to 19.1 to match the five-year high reached in November.
  • There were also strong indications that house prices will record further gains in the near term. In contrast to the consensus view that the past prices balance would ease from +49% to +45%, it actually rose to +52%. And the sales to unsold stock ratio rose to its highest level since March 2007, consistent with an acceleration in house price inflation. (See Chart 1.) Indeed, a continued fall in new sales instructions is likely to mean that competition between buyers will remain high.
  • This has led surveyors to revise up their expectations for the housing market. Even though three-quarters responded before the Budget, a balance of +6% expected sales to be higher in three months’ time and a balance of +11% expected higher prices, up from -27% and -12% respectively in January.
  • The continued buoyancy of the housing market, even before the extension of the stamp duty holiday was announced, suggests that the risk to house prices remain on the upside. Our view is that house price inflation will remain close to current elevated levels for most of the year before cooling in Q4. (See here.)

Chart 1: Ratio of Stock to Sales & House Prices

Sources: RICS, Nationwide, Capital Economics

Table 1: RICS Residential Market Survey – Key Figures

2020

2021

Net balances seasonally adjusted

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Past prices

29

7

-18

-30

-9

16

45

61

66

63

62

49

52

New buyer enquiries

20

-70

-93

0

60

73

58

47

39

24

13

-29

-9

New sales instructions

20

-68

-96

-15

41

55

42

33

25

13

1

-40

-29

Sales per surveyor (past 3m)

15.8

13.6

7.2

7.3

10.1

12.5

14.1

15.0

18.0

19.1

18.9

17.8

19.1

Unsold stocks per surveyor

42

40

35

35

39

41

42

42

43

45

46

43

43

Tenant demand

26

-2

-48

-12

24

43

49

33

21

3

15

9

26

Landlord instructions

-16

-32

-71

-43

-4

12

-1

-1

-8

-19

-12

-17

-28

Rent expectations

29

-24

-39

-11

11

22

31

19

11

8

20

16

37

Source: RICS


Andrew Wishart, Property Economist, +44 (0)7427 682411, andrew.wishart@capitaleconomics.com