Britain's housing market showed further signs of recovery in the past month, with property surveyors reporting a rise in house prices, sales, and buyer enquiries. However, the rental market
remains under significant pressure, as the demand for rental homes continues to far exceed the available supply.
The Royal Institution of Chartered Surveyors (RICS) revealed on Wednesday that its main house price balance, which tracks the difference between surveyors seeing price rises and falls, entered positive territory for the first time since October 2022.
The house price balance climbed to +11 in September, up from a revised zero in August, surpassing the +4 forecast by economists in a Reuters poll. Additionally, a net balance of +54 surveyors expect house prices to increase over the next year, marking the highest level of optimism since April 2022.
Looking ahead, expectations for sales in the next 12 months rose to a net balance of +45, compared to just +3 at the same time last year.
Tarrant Parsons, RICS' head of market analytics, attributed the recovery in buyer demand to a reduction in borrowing costs in August.
"A further easing of monetary policy is anticipated in the coming months, which should create a more favorable environment for the market," Parsons stated.
The Bank of England’s base interest rate currently sits at 5% following August’s first rate cut in four years. Last month, the central bank opted to hold rates steady, but investors are now estimating an 83% chance of a quarter-point rate cut on November 7.
Other indicators of the UK housing market also suggest a rebound, supported by the prospect of additional rate cuts by the BoE. Earlier this week, mortgage lender Halifax reported that house prices in September grew at their fastest annual rate since late 2022.
RICS also highlighted that a possible rise in capital gains tax, expected in the Labour government’s first budget later this month, is prompting some homeowners to list their properties. However, this trend is contributing to a reduced supply in the rental market.
In the rental sector, demand continues to rise, with rents projected to increase further in the months ahead.
Finance Minister Rachel Reeves has signaled that some taxes may have to increase in her first budget, set for October 30.