LONDON (Reuters) – Britain’s housing market is stuck in the doldrums after a long run-up in borrowing costs but the Bank of England’s pause in interest rate hikes last month has offered the prospect of some relief, a survey showed on Thursday.
The Royal Institution of Chartered Surveyors (RICS) house price balance, which measures the difference between the percentage of surveyors seeing rises and falls in house prices, edged down to -69 after August’s sharp drop to -68.
Echoing other gauges of British house prices, RICS’ latest figure was the weakest since February 2009 and was below the median forecast of -63 in a Reuters poll of economists.
Britain’s housing market boomed during the coronavirus pandemic as demand for homes with more space surged, but it has been a victim of the BoE’s run of 14 interest rate hikes, which began in December 2021.
In the near term, surveyors told RICS they saw further falls in sales and prices, although the expected declines were bit less severe than in recent months.
Expectations for sales volumes in 12 months’ time turned positive for the first since May.
Tarrant Parsons, senior economist at RICS, said subdued buyer activity reflected how the higher cost of mortgage borrowing was likely to remain a challenge for many households.
“Although the decision to pause monetary policy tightening a few weeks ago provided a glimmer of relief for the market, interest rates are likely now set to remain on hold for a prolonged period,” Parsons said.
“It appears there is little prospect of trends deviating much from the recent picture in the immediate future. That said, the outlook a little further ahead has improved slightly.”
The weak state of the housing market has hurt companies such as building materials supplier Travis Perkins, which on Wednesday downgraded its annual profit forecast by as much as 27%.
By contrast, the property rentals market is running hot with RICS’ demand balance standing at +43 while listings were down at -24, reflecting the lack of available properties.
Respondents to the survey predicted growth of almost 5% in the price of rents over the next 12 months.
(Reporting by William Schomberg, Editing by Kylie MacLellan)