The United Kingdom housing market appears to be showing signs of stabilization, according to a recent survey by the Royal Institution of Chartered Surveyors (RICS). The survey found that borrowing costs continued to ease and sales expectations for the next 12 months have edged into positive territory. These findings suggest that cheaper home loans are attracting potential buyers back into the market.
The RICS survey highlighted the Bank of England’s (BoE) decision to halt its historic rate-hiking cycle last month as a boost for market sentiment. This decision, coupled with the easing of borrowing costs, has contributed to a rebound in new buyer inquiries and sales from recent lows.
However, the RICS also cautioned about the outlook for the housing market. Despite the positive indicators, most measures are still in negative territory. Falling house prices are now more widespread than at any time since 2009, during the depths of the financial crisis.
The issue of affordability remains a concern, as the effects of previous BoE rate increases to tame inflation have left the housing market with incredibly stretched affordability. This poses a challenge for potential buyers, even with the recent easing of borrowing costs.
Tarrant Parsons, senior economist at RICS, commented on the situation, stating, “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.”
The RICS survey provides a nuanced view of the UK housing market, suggesting a possible stabilization due to the easing of borrowing costs and the BoE’s decision to halt rate hikes. However, it also emphasizes the challenges that persist, such as falling house prices and stretched affordability.
It is important to note that despite these positive signs, the housing market remains uncertain. As the BoE is expected to keep interest rates on hold for an extended period, it remains to be seen how this will impact the market in the long term.
Overall, the RICS survey indicates that while there may be glimmers of hope for the UK housing market, caution should still be exercised as challenges continue to linger.
More detail via The Star here… ( Image via The Star )