U.K. property surveyors anticipate continued sales growth in the coming months, as a measure of house prices turned positive for the first time in nearly two years. However, concerns about affordability persist, despite easing borrowing costs.
The Royal Institution of Chartered Surveyors (RICS) reported that its main house price balance—reflecting the difference between surveyors reporting price increases and decreases—moved into positive territory for the first time since October 2022. The balance climbed to +1 in August from -18 in July, surpassing the -14 forecasted by economists in a Reuters poll. Additionally, expected sales over the next three months reached their highest level since January 2020, just before the COVID-19 pandemic struck the U.K..
Other indicators suggest increasing momentum in the property market following a recent decline in interest rates. Data from mortgage lender Halifax revealed that house prices experienced their fastest annual growth since late 2022 in August. Nationwide reported a month-on-month price drop of 0.2 percent in August, marking the first decline since April.
Concerns over affordability
Simon Rubinsohn, chief economist at RICS, noted uncertainty regarding potential further interest rate cuts by the Bank of England and the upcoming budget. He pointed out that affordability remains an issue in the sales market, even with slightly cheaper financing options, and the situation is more acute in the rental market due to dwindling rental stock.
British finance minister Rachel Reeves is set to present her spending and tax plan on October 30. The Bank of England is expected to maintain interest rates on September 19 after cutting borrowing costs last month from a 16-year high of 5.25 percent.
Read more: BoE faces pressure as U.K. inflation nudges higher to 2.2 percent in July on energy cost
Improving buyer sentiment
RICS’ monthly survey also indicated improved overall sentiment and buyer interest. The measure of new buyer inquiries rose to a net balance of +15 in August, up from +4 in July, the highest level since October 2021. Additionally, the net balance of agreed house sales across Britain increased, with respondents noting a rise in available properties.
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