Property outlook: A pedestrian crosses Tower Bridge in view of skyscrapers on the skyline of London. Rents are expected to rise 4% across Britain in the coming 12 months due to an imbalance in demand and supply. — Bloomberg
LONDON: Britain’s housing market continued to feel the pinch of higher borrowing costs in March, but property surveyors expect some improvement over the year ahead as they think interest rates are now near their peak, a survey shows.
The Royal Institution of Chartered Surveyors (RICS) said its house price net balance – which measures the difference between the percentage of surveyors seeing rises and falls in house prices – fell to minus 43 last month, up from minus 47 in February, and slightly above the minus 48 forecast in a Reuters poll of economists.
RICS’s gauges of buyer demand, sales, new listings and house prices were all in negative territory last month.
The net balance of agreed sales across Britain slipped to minus 31 in March from minus 25 for February, but still above the minus 43 low in October 2022 when financial market turmoil after former prime minister Liz Truss’s mini-budget temporarily halted new mortgage lending.
However, its indicators looking ahead pointed to hints of stability in Britain’s housing market in the coming 12 months. The sales expectations balance for 12 months’ time rose to one, its highest since March 2022.
“The overall tone of the feedback received from respondents ... is still one of caution towards the sales market, which is reflected in both the headline price and activity indicators,” Simon Rubinsohn, RICS chief economist, said.
“There is also a sense that the medium-term outlook is looking a little more settled, helped by the perception that the interest rate cycle may be near the peak.”
The Bank of England raised interest rates by a quarter point to 4.25% last month in an effort to bring back double-digit inflation to its 2% target, but has hinted it is nearing the end of its run of rate hikes which began in December 2021.
Other measures of Britain’s housing market have shown a mixed picture. Mortgage lender Nationwide reported a 3.1% drop in house prices in the year to March – the fastest annual fall since July 2009 – while rival Halifax said prices grew 1.6% year-on-year.
In contrast to property price falls, RICS said rents are expected to rise 4% across Britain in the coming 12 months due to an imbalance in demand and supply.
Its non-seasonally adjusted monthly tenant demand growth indicator hit a five-month high, with a net balance of 46.
Rubinsohn said the rental market remains hugely constrained by the lack of homes to rent. — Reuters
