UK property market strengthens, pressure on renters intensifies, RICS says
2024.10.09 19:33
LONDON (Reuters) – Britain’s housing market recovered further last month, according to property surveyors who said house prices, sales and enquiries rose, but pressure in the rental sector intensified as tenant demand continued to outstrip the number of available homes to rent.
The Royal Institution of Chartered Surveyors said on Wednesday that its main house price balance, which measures the difference between surveyors seeing falls and rises in house prices, moved into positive territory for the first time since October 2022.
Its house price balance rose to +11 in September after a revised August reading of zero, well above the +4 forecast by economists in a Reuters poll. A net balance of +54 of surveyors expected house prices to increase in the coming year, the strongest reading since April 2022.
A measure of expected sales for the next 12 months rose to a net balance of +45, compared to +3 a year ago.
Tarrant Parsons (NYSE:), RICS’ head of market analytics, said the reduction in borrowing costs in August had helped to recover buyer demand.
“A further unwinding in monetary policy is anticipated over the months ahead, which should create a more favourable backdrop for the market moving forward,” Parsons said.
The Bank of England’s benchmark Bank Rate now sits at 5% after August’s first reduction in borrowing costs in four years. The British central bank kept rates on hold last month. But investors on Wednesday assigned a roughly 83% chance of a quarter-point cut on Nov.7.
Other gauges of Britain’s housing market have also pointed to a recovery, helped by expectations of another interest rates cut by the BoE. Figures from mortgage lender Halifax on Monday showed house prices grew in September at the fastest annual pace since late 2022.
RICS said that a potential rise in capital gains tax in the new Labour government’s first budget later this month was prompting some homeowners to list their properties but that this was contributing to a lack of supply for renters.
In the lettings market, demand continued to tick up and rents are projected to rise over the coming months.
Finance minister Rachel Reeves has warned some taxes will have to go up in her inaugural Oct. 30 budget.
