Analysts at Citi pointed to UK housing market indicators softening through November and December, with the usual seasonal slowdown compounded by fragile sentiment around the Budget.
In its latest sector trends tracker, the American bank notes house prices were marginally lower in December on a sequential basis, while the lull into the holiday period has provided “little clues” on post-Budget buyer appetite.
That leaves investors looking for clearer evidence that demand is rebuilding as the market moves into the key spring selling season.
Citi does, however, point to some early green shoots. Reports of record Boxing Day website traffic from Rightmove are seen as supportive of expectations for a spring bounce, even if the bank stresses it is too early for the broader activity data to confirm that trend.
The other encouraging development is on affordability. Citi highlights that mortgage rates have edged lower at the start of the year – particularly two-year fixes – reflecting a drop in gilt yields. The bank sees that as a positive signal for buyer affordability, which has been a central constraint on transaction activity.
For now, Citi’s message is that conditions are improving at the margin, but sentiment – and valuations – likely need hard evidence of a spring upturn before re-rating the sector.