The UK housing market is poised for an upswing in sales in the coming months, following the Bank of England’s interest rate reduction and the new government’s focus on the housing sector, according to a survey released on Thursday.
The Royal Institution of Chartered Surveyors (RICS) reported that its sales expectations index for the next three months reached its highest level since January 2020, just before the onset of the COVID-19 pandemic in Britain.
“The recent base rate cut by a quarter-point and the new government’s emphasis on promoting housing development seem to have positively influenced the market sentiment,” stated Simon Rubinsohn, RICS Chief Economist.
“However, significant challenges remain in achieving the goals related to planning reform. It is uncertain whether the Bank of England will continue to ease policies after the August rate cut. Nonetheless, the current policy environment is becoming more favorable for the housing sector,” he added.
The housing market showed signs of improvement last month as mortgage rates declined in anticipation of the BoE’s August 1st rate cut, which lowered borrowing costs from their 16-year peak.
For the first time in four months, a measure of new buyer inquiries turned positive, and agreed sales also saw an uptick.
However, RICS reported that its house price index in July fell to -19 from June’s -17, contrary to economists’ expectations of an improvement to -10, as per a Reuters poll.
Additional data from mortgage lenders Nationwide and Halifax indicated a rise in house price growth last month.
In contrast, the rental market faced a more challenging outlook. Demand from tenants increased, while the supply of available rental properties decreased, suggesting potential future increases in rental prices.
Rubinsohn noted that the survey results highlighted “an increasingly challenging environment for investment in the rental sector.”
The new government has also adopted the previous administration’s delayed plans to tighten no-fault eviction rules, causing concern among landlords. Additionally, recent changes in tax policies and energy efficiency regulations have further increased costs for landlords.
