British home-buyers, facing higher interest rates, retreat in April – RICS

7:14 pm Wednesday, May 10th, 2023

By Suban Abdulla

LONDON (Reuters) – British property surveyors reported a drop in demand in April as new buyers turned more cautious ahead of the Bank of England’s latest expected interest rate increase, an industry survey showed on Thursday.

The Royal Institution of Chartered Surveyors (RICS) said its measure of new buyer enquiries fell to a net balance of -37 in last month from -30 in March, the lowest since January.

The BoE is expected to increase borrowing costs for a 12th meeting in a row on Thursday, taking Bank Rate to 4.5% from 4.25%, as it tries to keep a lid on inflation which was running at 10.1% in March.

The RICS house price balance, which measures the difference between the percentage of surveyors seeing rises and falls in prices, rose to -39 in April from -43 reported in March and -47 in February.

April’s figure was slightly above the -40 level that economists had forecast in a Reuters poll.

Simon Rubinsohn, chief economist at RICS, said the survey pointed to challenges in terms of sales and lettings.

“Most notably, buyer demand still appears to be subdued in the face of relatively high borrowing costs, the prospect of at least one more interest rate hike and ongoing affordability challenges,” Rubinsohn said.

However, RICS said most of the survey’s indicators improved slightly from the lows of late 2022 after the market turmoil that followed former prime minister Liz Truss’s “mini-budget”.

The net balance of agreed house sales across Britain fell slightly but respondents noted a pick-up in the number of properties on the market.

The survey pointed to a further improvement in the market in the coming 12 months.

Data from mortgage lender Halifax published on Tuesday showed house prices grew at the slowest annual pace in more than 10 years in April. But Nationwide said prices rose by a monthly 0.5% in April after falling for the seven previous months.

(Reporting by Suban Abdulla; Editing by William Schomberg)