Britain's housing market saw further recovery last month, with property surveyors reporting increases in house prices, sales, and enquiries. However, the rental sector faced growing pressure as tenant demand exceeded available rental homes. According to the Royal Institution of Chartered Surveyors, their main house price balance, which tracks the difference between surveyors reporting price rises and falls, turned positive for the first time since October 2022. The balance reached +11 in September, up from a revised zero in August, surpassing economists' forecast of +4. Additionally, a net balance of +54 surveyors anticipated house prices to rise over the next year, marking the strongest outlook since April 2022.
A measure of expected sales for the next 12 months increased to a net balance of +45, up from +3 a year ago. Tarrant Parsons, head of market analytics at RICS, attributed the recovery in buyer demand to the reduction in borrowing costs in August. Parsons added that further easing of monetary policy is expected in the coming months, which should create a more supportive environment for the market.
The Bank of England's benchmark interest rate stands at 5% after August's first rate cut in four years. While the central bank held rates steady last month, investors see about an 83% chance of a quarter-point rate cut on November 7.Other indicators of Britain's housing market also suggest a recovery, supported by expectations of further interest rate cuts from the Bank of England. Data from mortgage lender Halifax showed house prices in September rising at the fastest annual rate since late 2022.
RICS noted that speculation over a potential increase in capital gains tax in the new Labour government's upcoming budget has driven some homeowners to put their properties on the market, inadvertently exacerbating the shortage of rental housing. In the rental sector, demand continues to rise steadily, with rents expected to climb further in the coming months. Finance minister Rachel Reeves has already signaled that some tax hikes will be necessary, setting the stage for her inaugural budget on October 30.
Britain's housing market is showing signs of recovery, with rising house prices and positive forecasts driven by lower borrowing costs. However, the rental sector struggles with high demand and limited supply, compounded by potential tax increases in the upcoming Labour budget. Continued monitoring of these trends will be essential.
via [Prop News Time]