UK house sales should get a boost over the next three months amid hopes that mortgage rates will soon begin to fall, according to a survey.
A net balance of 20% of professionals expect to see a recovery in home sales over the next three months, marking the highest level of sales expectations since January 2022, the Royal Institution of Chartered Surveyors (Rics) said.
Economists have predicted that the base rate could be chopped from its 16-year high of 5.25% to 5% at the next vote on August 1. In response, the UK’s biggest banks have been cutting mortgage rates in recent days, providing some relief to homeowners and prospective buyers.
The newly elected Labour government has voiced a strong commitment to boosting the housing market, aiming to deliver 1.5 million homes over the next five years, a figure not hit since the 1960s.
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A balance of 54% of professionals in the survey expect house prices to be higher in a year’s time, which Rics said highlights a key challenge for the new government, as boosting the supply of homes “will not be an easy task”.
Tarrant Parsons, Rics senior economist, said: “Although activity across the housing market remained subdued last month, forward looking aspects did improve slightly.
“There are some factors emerging now that could support a recovery in the months ahead.
“If the Bank of England does decide that the current inflation backdrop is benign enough to start loosening monetary policy next month, this may prompt a further softening in lending rates.
“In addition, the recent election delivered a clear outcome, with housing pushed up the political agenda.”
When it comes to the rental market, demand continues to outstrip supply despite sharp increases in rent in many parts of the country.
A net balance of 28% of professionals saw a pick-up in tenant demand in June. Meanwhile, a net balance of 11% saw a fall in new landlord instructions, pointing to a renewed decline in new rental listings.
Looking forward, a net balance of 38% of professionals expect rental prices to rise over the next three months.
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Sarah Coles, Yahoo Finance UK columnist and head of personal finance at Hargreaves Lansdown, said: “Before the election, June brought more of the bad news the market has been used to seeing – with falling sales and prices, and dwindling buyer numbers.
“Things were so miserable that even the number of new sellers fell back. It wasn’t helped by stubbornly high mortgage rates, with Moneyfacts figures showing the average two-year fixed rate remained just shy of 6% for most of the month.
“July may hold more hope, in part because of the election result, and the arrival of a new government.”
She added: “Agents are holding out hope for an upswing in consumer sentiment, buoyed by the optimism that a change at the top can engender, and hope that life in general will change for the better.
“We will have to see whether this materialises, and encourages more enthusiastic buyers into the market in the weeks to come.”
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