According to a survey conducted by the Royal Institution of Chartered Surveyors (RICS), the UK housing market continued to suffer the effects of higher borrowing
costs in March, with all of the institution's gauges remaining in negative territory. Despite this, RICS also reported some positive signs for the housing market over the next year, as surveyors expect interest rates to have reached their peak.
In March, RICS's house price net balance, which measures the difference between the percentage of surveyors seeing rises and falls in house prices, fell to -43, a slight improvement from February's -47, and just above the -48 predicted by a Reuters poll of economists. Similarly, the net balance of agreed sales across the country dropped to -31 in March from February's -25, but was still higher than the low of -43 recorded in October 2022 when financial market turmoil temporarily halted new mortgage lending.
Despite the continued weakness of the UK housing market, RICS's indicators looking ahead suggest that there may be some improvement on the horizon. The sales expectations balance for the next 12 months rose to +1, the highest level seen since March 2022.
RICS also noted that surveyors believe interest rates have reached their peak, which may help stabilise the market. However, the institution cautioned that rising inflation and supply chain disruptions could still pose challenges for the housing market in the future.
The UK's housing market has been impacted by several factors over the past year, including the COVID-19 pandemic, Brexit uncertainty, and rising inflation. Additionally, the Bank of England has raised interest rates twice in recent months to combat inflation, which has made borrowing more expensive and weighed on the housing market.
While the outlook for the housing market remains uncertain, RICS's survey suggests that there may be some cause for optimism in the coming year, particularly if interest rates stabilise and the economy continues to recover from the pandemic. However, supply chain issues and inflation will continue to be factors to watch in the months ahead.