Buyer demand jumped for a third successive month, while sales also rose
A closely watched gauge of UK house prices has turned positive for the first time in almost two years amid hopes that the BoE will further cut borrowing costs.
The RICS said its headline index rose to 11 in September from zero the previous month as agents across all regions reported higher prices and anticipated further gains. Buyer demand jumped for a third successive month, while sales also rose.
Buying a home is becoming more affordable thanks to the Bank of England’s first interest-rate cut since the pandemic and growing real incomes. In an interview published last week, governor Andrew Bailey raised the prospect of more cuts to come if inflation stays put at the 2% target.
The latest survey results once again convey a brighter picture for housing market activity, with the recent easing in mortgage interest rates continuing to support a recovery in buyer demand, according to Tarrant Parsons, head of market analytics at RICS. Critical for the outlook, a further unwinding in monetary policy is anticipated over the months ahead, which should create a more favourable backdrop for the market moving forward.
The figures add to evidence of strengthening the housing market, with recent surveys from Nationwide Building Society, Halifax and Rightmove all showing prices increasing. RICS’s index, which shows the difference between agents reporting higher prices and those saying prices dropped, was last positive in October 2022.
Speculation that the new Labour government will raise capital gains tax in the October 30 budget is also spurring some homeowners to list their properties, the report said. While that benefits prospective buyers, it is bad news for tenants as the supply of homes to rent is already in short supply.
The survey showed imbalances in the letting market worsened in September, with agents reporting both a continuing drop in rental properties as well as rising demand. As a result, rent prices are expected to rise over the next quarter.
While the Renter’s Rights Bill aims to improve standards and offer better protections for tenants, we must ensure that these reforms do not discourage responsible landlords from remaining in the market, said RICS president Tina Paillet. Most importantly, the planned changes in the private rental sector fall short of tackling the core issue: increasing supply and making housing more affordable for tenants.