© Reuters. Banners advertising new houses for sale a seen on a new housing development under construction in Partington, Britain June 1, 2023. REUTERS/Phil Noble/File Photo
By Suban Abdulla
LONDON (Reuters) – Britain’s housing market showed signs of a slowdown in June and property surveyors expect activity to remain subdued as higher borrowing costs hit new buyer enquiries, according to an industry survey on Thursday.
The Royal Institution of Chartered Surveyors (RICS) said a net balance of -45 in a poll of its members reported a fall in new buyer enquiries last month, down from the -20 in May.
June’s reading – which represents the difference in percentage points between members seeing rises and falls in new buyer enquiries – was the most negative figure since a -51 in October last year in the aftermath of former prime minister Liz Truss’s “mini-budget” economic plan.
Britain’s housing market faces pressure from softer buyer demand and falling house prices against a backdrop of surging mortgage rates and the Bank of England’s battle to tame stubborn inflation. Average two-year fixed mortgage rates hit a 15-year high earlier this week.
Simon Rubinsohn, chief economist at RICS, said activity levels were likely to remain subdued in this environment.
“The latest increase in interest rates and the impact this has already had on mortgage rates is clearly visible in … buyer enquiries, sales and prices which have all retreated over the past month,” Rubinsohn said.
Financial markets expect the BoE, which has raised interest rates for 13 times in a row since December 2021, to increase its Bank Rate to 6.25% by the end of this year, up from 5% now.
RICS’ gauge of agreed sales slipped to a net balance of -34 in June, significantly below the -8 in May, and the lowest in six months.
Its house price balance – which measures the difference between the percentage of surveyors seeing rises and falls in house prices – declined to -46 last month from -30 in May. A Reuters poll of analysts had pointed to a reading of -34.
British mortgage lender Halifax, last week said house prices fell by 2.6% year-on-year in June, the largest annual drop since 2011. Rival Nationwide reported a 3.5% annual decline in property prices, the biggest since 2009.
