(Bloomberg) -- UK property surveyors are the most optimistic they’ve been in 13 months about new buyer demand after falling mortgage rates and a rosier economic picture helped stabilize house prices. 

The Royal Institution of Chartered Surveyors’ measures of buyer inquiries and new listings continued to increase in March as prospective homeowners bet that the Bank of England will lower borrowing costs.

While the indicator for sales remained in negative territory, surveyors, who appraise properties coming to market, turned more upbeat about the near-term outlook. RICS said its gauge tracking sales volumes expectations over the next three months improved to 13 from 6.

“The market has cheered up in March due to a reduction in mortgage rates and the onset of Spring,” said Julian Bunkall, a surveyor at Jackson Stops in Shaftesbury. “Generally an optimistic feel but the onset of the general election may cause more nervousness.”

The report suggests house prices have stabilized and are set for a bounce back after last year’s slight decline. RICS’ indicator of house prices grew less negative for the seventh month in a row, rising from minus 67 in September to minus 4 in March. Surveyors expect the market will return to growth over the next 12 months in every UK region, particularly in Northern Ireland, London and Scotland.

“Sellers are feeling a little bit more confident bringing their property to the market whereas last year, they would feel a bit more reluctant to list given how weak demand was, and possibly having to accept offers below what they may have achieved in 2020,” Tarrant Parsons, senior economist at RICS, said in a Bloomberg Radio interview.

The findings are in line with Bank of England data showing mortgage approvals jumping to a 17-month high. Mortgage rates have eased from the 15-year highs seen last summer, and household incomes are rising in real terms again.

Further evidence that the housing market is strengthening came in the BOE’s quarterly survey of credit conditons published Thursday. It found that demand for mortgages rose in the three months to end-February and is expected to increase in the quarter to May. Lenders are responding by increasing the supply of loans. 

Still, other recent reports have injected more caution about the housing market’s recovery. Lender Halifax said house prices slipped for the first time in six months, while Nationwide Building Society also reported an unexpected drop.

“Near-term sales expectations point to an improving outlook, albeit the scope for an acceleration in activity will still be relatively limited given mortgage rates are set to remain much higher than in 2020/21,” Parsons said.

--With assistance from Caroline Hepker.

(Adds RICS comment in Bloomberg Radio interview, BOE credit conditions survey)

©2024 Bloomberg L.P.