Valuers are expecting a modest pick-up in residential sales following the general election and improving mortgage rates, the latest index from the Royal Institution of Chartered Surveyors suggests.

Over the next three months, a net balance of +20 of respondents anticipate a recovery in residential sales up from +10 in June, marking the most optimistic outlook for two and a half years, since January 2022. 

RICS says these results indicate that respondents have confidence in the newly-elected Labour government, which is aiming to deliver 1.5m homes over the next five years, a figure not hit since the 1960s.

Looking at price expectations over the next twelve months, a net balance of +54 of respondents believe prices will continue to rise, which will intensify affordability pressure for buyers.

In the rental market, demand continues to outstrip supply and there have been sharp increases in rent in many parts of the country

A net balance of +28 of respondents saw an increase in tenant demand in June.

But, many respondents reported a drop in new landlord instructions, with the net balance falling from -3 to -11, putting a further squeeze on the supply of properties.

Looking ahead, a net balance of +38 of respondents expect rents to rise over the coming three months. 

North London estate agent and former RICS residential chairman Jeremy Leaf says: “The election had limited impact on our buyers and sellers, not just because the outcome had been largely factored in but the pace and level of mortgage rate reductions was much more relevant. 

“Over the past month and particularly since the result, we have seen a rebound in confidence and activity. 

“However, we are not getting carried away as the increased choice and continuing economic concerns will keep the higher price aspirations of homeowners in check.”

RICS senior economist Tarrant Parsons says: “Although activity across the housing market remained subdued last month, forward looking aspects did improve slightly.

“There are some factors emerging now that could support a recovery in the months ahead. 

“If the Bank of England does decide that the current inflation backdrop is benign enough to start loosening monetary policy next month, this may prompt a further softening in lending rates. 

“In addition, the recent election delivered a clear outcome, with housing pushed up the political agenda.”