**

RICS Warns: Market Stabilization is Fragile Despite Encouraging Signs – Property Market Outlook 2024

The Royal Institution of Chartered Surveyors (RICS) has released its latest market survey, revealing a cautious optimism within the UK property market. While recent data points towards a potential stabilisation after a period of significant volatility driven by rising interest rates and cost of living crisis, the professional body cautions against premature celebrations, highlighting persistent challenges and uncertainties that could easily derail any nascent recovery. The report underscores the need for a nuanced approach to property investment and market analysis, urging both buyers and sellers to proceed with vigilance.

A Balancing Act: Signs of Stabilization Amidst Ongoing Uncertainty

The RICS survey indicates a slight easing of downward pressure on house prices across both the residential and commercial sectors. This tentative stabilisation is attributed to several factors, including a slowing pace of interest rate hikes by the Bank of England and signs of easing inflation. However, the overall picture remains complex. While some regions report a modest increase in new buyer inquiries, this hasn't translated into a surge in transactions. The market is still characterized by a significant imbalance between supply and demand, with many potential sellers hesitant to list their properties due to concerns about securing competitive offers.

Residential Property Market: A Cautious Uptick

The residential market shows some encouraging signs, with a marginal decrease in the net balance of surveyors reporting falling house prices. However, RICS notes this improvement is relatively modest and geographically uneven. Key findings include:

• Slight increase in new buyer inquiries: A positive signal but not yet indicative of robust market activity.
• Persistent low stock levels: This continues to support prices, but also limits market fluidity.
• Lengthening sales times: Suggesting buyers remain cautious and are taking their time to make decisions.
• Regional variations: Market conditions vary significantly across different parts of the UK, with some areas experiencing stronger activity than others.

The report highlights the continued sensitivity of the housing market to interest rate changes, emphasizing the need for consistent economic stability to prevent another downturn. The affordability crisis, fuelled by high borrowing costs and inflation, continues to restrict many potential buyers from entering the market.

Commercial Property Market: Navigating Headwinds

The commercial property market remains under pressure, although the rate of decline is slowing according to RICS. The office sector continues to face challenges, particularly in city centers, as hybrid working models gain widespread adoption. However, there are pockets of strength in other sectors, such as industrial and logistics, driven by strong occupier demand. Key observations from the commercial market include:

• Decreased rental growth: The pace of rental increase is slowing, reflecting a cooling in demand.
• Increased availability of office space: This is partially a consequence of businesses downsizing their office footprints.
• Resilience in industrial and logistics: These sectors remain relatively strong due to robust e-commerce activity.
• Investment market uncertainty: Investors remain cautious, awaiting greater clarity on future economic conditions.

RICS' Key Recommendations for Navigating the Market

The RICS emphasizes the importance of a long-term perspective when assessing the property market. They advise both buyers and sellers to conduct thorough due diligence and seek professional advice before making any major decisions. Their key recommendations include:

• Careful consideration of affordability: Buyers should carefully evaluate their financial capacity and ensure they can comfortably manage mortgage repayments in a potentially volatile environment.
• Realistic pricing strategies: Sellers should price their properties competitively to attract buyers in a still-constrained market.
• Professional valuation advice: Both buyers and sellers should obtain independent valuations to ensure fair market pricing.
• Monitoring economic indicators: Staying informed about key economic data, such as interest rates and inflation, is crucial for informed decision-making.

Looking Ahead: The Property Market Outlook for 2024

The RICS suggests that the property market will likely remain relatively subdued in the near term. The ongoing economic uncertainties, coupled with the lingering effects of high inflation and interest rates, are likely to continue to dampen market activity. However, the report also highlights the potential for a gradual recovery throughout 2024, provided that inflation continues to ease and interest rate rises moderate.

Factors Influencing Future Market Performance

Several key factors will shape the trajectory of the property market in the coming year, including:

• Interest rate movements: The Bank of England's monetary policy decisions will remain a significant driver of market sentiment.
• Inflation levels: A persistent decline in inflation will be crucial for boosting consumer confidence and stimulating market activity.
• Government policy: Government interventions, such as changes to stamp duty or mortgage regulations, could have a significant impact.
• Geopolitical events: Global events could introduce further uncertainties and volatility.

The RICS stresses the importance of adaptability and flexibility for all stakeholders in the property market. Both buyers and sellers need to be prepared to adjust their strategies based on evolving market conditions. The report underscores the need for continued vigilance and a proactive approach to navigating the complexities of the current landscape. The market shows fragile signs of stabilization but the journey to recovery remains delicate and dependent on several interconnected factors, emphasizing the need for caution and considered decisions. Further updates and analysis will be crucial in understanding the continued evolution of the property market throughout the year.