Britain’s Housing Market Set for a Sales Bounce

LONDON (Reuters) – Britain’s housing market looks set for a sales bounce in the coming months after the Bank of England cut interest rates and the new government turned its focus to the sector, a survey showed on Thursday.

The Royal Institution of Chartered Surveyors stated that its measure of expected sales over the next three months was the strongest since January 2020, just before the coronavirus pandemic hit Britain.

RICS Chief Economist Simon Rubinsohn noted, “The new government’s focus on boosting housing development alongside the recent quarter-point base rate cut does appear to have shifted the mood music in the sales market.”

He continued, “Inevitably, significant challenges lie ahead in delivering on the ambitions around planning reform and it is far from clear that the Bank of England will follow the August move with further easing over the coming months, but, even so, the policy mix is becoming more supportive for the sector.”

The overall outlook for the housing market improved slightly last month as mortgage rates fell ahead of the August 1 BoE cut to borrowing costs from their 16-year high. A measure of new buyer inquiries turned positive for the first time in four months, and agreed sales also showed improvement.

However, RICS’ measure of house prices in July slipped back to -19 from June’s -17. Economists polled by Reuters had expected an improvement to -10.

Other house price data previously released by mortgage lenders Nationwide and Halifax indicated a pickup in price growth last month.

On the rental side, the situation appeared bleaker, with rising tenant demand and shrinking supply, suggesting further rental price increases ahead. Rubinsohn remarked that these results showed “an increasingly hostile environment for investment in the sector.”

The previous government’s delayed plans to tighten no-fault eviction rules have been picked up by the new administration, raising concerns among landlords, while changes to tax and energy efficiency regulations have increased their costs in recent years.