British property surveyors anticipate further growth in sales in the upcoming months, following the first positive reading on a measure of house prices in almost two years.
However, even with lower borrowing costs, concerns about affordability persisted. The primary house price balance, which gauges the difference between surveyors’ observations of increases and decreases in home prices, entered positive territory for the first time since October 2022, according to a report released by the Royal Institute of Chartered Surveyors.
Its house price balance increased from -18 in July 2024 to +1 in August, significantly exceeding the Reuters poll’s average economist prediction of -14. Expected sales for the next three months were at their highest level since January 2020—before the COVID-19 pandemic hit the United Kingdom.
Additional markers of the European country’s real estate market suggest that the industry is gaining traction following a recent decline in interest rates.
According to data from mortgage lender Halifax, house prices rose in August at the fastest annual rate since late 2022. However, competitor Nationwide reported that prices fell in August for the first time since April, with a month-over-month decrease of 0.2%.
Chief economist at RICS Simon Rubinsohn stated that there was some doubt regarding the potential for future budget and Bank of England interest rate cuts.
“Affordability remains an issue in the sales market even with somewhat cheaper finance now available but the picture appears even more acute in the lettings market where the amount of rental stock continues to diminish,” he remarked.
In October 2024, British Finance Minister Rachel Reeves will present her tax and spending plan. In September, the Bank of England (BoE), on the other hand, is anticipated to keep interest rates steady, after cutting borrowing costs for the first time last month from a 16-year high of 5.25%.
The general mood and buyer interest have improved, according to RICS’s monthly survey. From +4 in July to +15 last month, its measure of new buyer enquiries reached its highest point since October 2021.