Increase in sales despite rising interest rates

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UK house prices over the three and 12 month time horizons are expected to rise. Photo: Getty

The UK property market shrugged off the Bank of England (BoE) interest rate hike after February’s surge in sales as sector momentum strengthened slightly.

According to the latest RICS residential market survey, new buyer inquiries and agreed sales picked up during the month despite rising tariffs and growing concern over rising energy prices.

A net 17% of survey participants said they saw an increase in inquiries from new buyers. It is the sixth consecutive time an increase has been reported and the largest during this period, RICS said.

The survey showed that the number of agreed sales also improved over the same period, with a net balance of 9% indicating that home sales were on the rise. This is the strongest reading since May 2021.

Three- and 12-month national sales forecasts.  Chart: RICS

Three- and 12-month national sales forecasts. Chart: RICS

Looking ahead, RICS expects sales to increase in the next quarter, albeit at a slower pace. Respondents also expect sales to remain on an upward trajectory in the coming year.

Meanwhile, the body said the prolonged deterioration in the volume of new sell instructions coming into the market has leveled off, with the net balance down to -4% from -7% previously.

Respondents expect domestic house prices to rise further over the three- and 12-month time horizons.

“Interestingly, these price expectations have actually risen slightly since the first interest rate hike was sanctioned by the Bank of England in December,” RICS said.

Read more: Rightmove predicts UK property market boom after 2021 record high

However, despite the sentiment, experts say the trend is unlikely to last and could exacerbate challenges for low-income households amid soaring energy prices, a cost-of-living crisis and geopolitical tensions. .

“Huge clouds of uncertainty hang over the economic outlook as energy prices continue to rise and the BoE grapples with how to manage monetary policy in this challenging environment,” said Simon Rubinsohn, economist Chief at RICS.

He added: “Despite all of this, there is still little evidence that the mood music around house price or rent expectations is changing. Indeed, the medium-term projections of respondents to the RICS survey continue to grow.

“These trends may subside as the deteriorating macro environment begins to bite, but the message that keeps coming back, both for sales and rentals, is that there is in the together many more potential buyers and tenants than available properties.”

Read more: Soaring mortgage approvals fuel UK property boom

Move right (RMV.L), Britain’s largest property website, recently predicted that the UK property market will boom this year, forecasting robust demand even in the face of 30-year high inflation.

Similarly, Zoopla’s house price index showed that The UK property sector has had the busiest start to the year since 2016sales agreed so far this year match levels seen in early 2021.

The average house price is now £244,100, up 7.8% in the year to the end of January, and up around £80,000 over the past decade, according to the real estate website.

Watch: Will UK house prices ever drop?

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