© Reuters. Estate agent signs are seen outside residential housing in South London, Britain, August 7, 2023. REUTERS/Alishia Abodunde/File Photo
By Suban Abdulla
LONDON (Reuters) – The downturn in Britain’s housing market eased last month as falling mortgage rates pushed up demand, according to a survey published by the Royal Institution of Chartered Surveyors on Thursday that added to signs of stabilisation in the sector.
The RICS measure of new buyer enquiries rose to a net balance of -3 in December – its least negative since April 2022 – from November’s -13. A gauge of agreed home sales increased to -6 in December, the highest reading since March 2022.
Tarrant Parsons, senior economist at RICS, said lower borrowing costs in financial markets had provided some relief for the sector in recent weeks after a challenging 2023.
“Supported by an easing in mortgage interest rates of late, buyer demand has now stabilised, and this is expected to translate into a slight recovery in residential sales volumes over the coming months,” Parsons said.
Thursday’s survey mirrored other measures of Britain’s housing sector that have pointed to a stabilisation.
Mortgage rates have eased in recent months from their record highs in the aftermath of the “mini-budget” crisis in late 2022, although they are still elevated in historical terms.
The Bank of England has held its benchmark Bank Rate at a 15-year high of 5.25% at its last three meetings after 14 consecutive increases between December 2021 and August 2023.
A surprise uptick in inflation in December diminished investors’ rate cut expectations on Wednesday.
“The lending climate is set to remain restrictive compared to much of the post-global financial crisis era next year, meaning any uplift in activity is likely to be limited for the time being,” Parsons said.
RICS’ house price balance, measuring the gap between the percentage of surveyors seeing rises and falls in house prices, rose to -30 in December from -41 in November and readings below -60 in September and August, the lowest since 2009.
Economists polled by Reuters had forecast a smaller recovery to -34.
Survey respondents broadly expected house prices to remain largely flat in the year ahead.
Demand also continued to rise in the lettings market, although at a softer pace over recent months and rents are projected to rise by around 4% in the coming 12 months, inflated by a lack of available properties.
