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 said its measure of expected sales over the next three months was the strongest since January 2020, immediately before the coronavirus pandemic struck Britain.
“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,” RICS Chief Economist Simon Rubinsohn said.
“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,” he added.
The overall picture for the housing market brightened slightly last month as mortgage rates fell ahead of the Aug. 1 BoE cut to borrowing costs from their 16-year high.
A measure of new buyer enquiries turned positive for the first time in four months and agreed sales also improved.
But RICS’ measure of house price 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 pointed to a pickup in price growth last month.
The picture was bleaker in the rental sector where demand from tenants increased while a measure of supply shrank, suggesting further rental price rises ahead.
Rubinsohn said the findings reflected what he called “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, worrying some landlords, while changes to tax and energy efficiency rules have added to their costs in recent years.
