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UK property market strengthens, pressure on renters intensifies, RICS says

investing.com 09/10/2024 - 23:09 PM

Britain's Housing Market Recovery

LONDON (Reuters) – Britain's housing market showed further signs of recovery last month, with property surveyors reporting increases in house prices, sales, and inquiries. However, the rental sector faces heightened pressure as tenant demand outpaces the availability of homes for rent.

The Royal Institution of Chartered Surveyors (RICS) reported on Wednesday that its main house price balance, which tracks surveyor perceptions of falling vs rising house prices, entered positive territory for the first time since October 2022.

The house price balance jumped to +11 in September from a revised zero in August, significantly exceeding the +4 predicted by economists in a Reuters poll. Meanwhile, a net balance of +54 surveyors forecasted that house prices will rise in the coming year, marking the strongest reading since April 2022.

The expected sales measure for the next year climbed to a net balance of +45, up from +3 a year prior.

Tarrant Parsons, RICS' head of market analytics, noted that the reduction in borrowing costs in August had spurred buyer demand. He anticipates further monetary policy easing in the coming months, creating a more favorable market environment.

Currently, the Bank of England's benchmark Bank Rate stands at 5%, following August's first rate reduction in four years. While the central bank held rates last month, investors indicated a roughly 83% probability of a quarter-point cut on November 7.

Other indicators also point to UK housing market recovery, fueled by expectations of additional interest rate cuts by the BoE. Mortgage lender Halifax reported a significant annual increase in house prices in September, the highest since late 2022.

RICS mentioned that concerns over a potential increase in capital gains tax in the Labour government's upcoming budget are prompting some homeowners to list their properties, which is concurrently limiting rental supply.

In the lettings market, demand continues to rise, with rents projected to increase in the upcoming months. Finance minister Rachel Reeves has cautioned that some taxes must rise in her first budget on October 30.




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