UK property surveyors see pick-up in house sales later in 2024

7:03 pm Wednesday, May 08th, 2024

By David Milliken

LONDON (Reuters) – British property surveyors expect an increase in property sales later this year, despite an ongoing drag from high borrowing costs, as the number of homes being put up for sale rose last month at the fastest pace since September 2020.

The Royal Institution of Chartered Surveyors said on Thursday that its main house price balance held at -5 in April, unchanged from March, as waning chances of an early Bank of England rate cut nudged up mortgage costs.

But there were signs of a rising volume of transactions, chiming with Bank of England data last week which showed a 20% annual rise in mortgage approvals in March to an 18-month high.

RICS’ aggregate sales balance rose to its highest since May 2021 in April, although the net balance for new buyer enquiries fell below zero for the first time in four months.

“A modest back up in mortgage pricing has contributed to the flatlining in the buyer enquiries metric over the past month,” RICS Chief Economist Simon Rubinsohn said.

“That said, there is still a strong perception that activity in the market will pick up in the latter part of the year and into 2025, irrespective of any political uncertainty around the general election.”

House purchases fell sharply after former Prime Minister Liz Truss’ budget plans spooked lending markets in September 2022, and prices drifted lower following a 25% rise since the start of the COVID-19 pandemic.

Truss’ successor, Rishi Sunak, must hold a national election no later than January 2025.

Mortgage lender Halifax said on Tuesday that prices had plateaued since the start of the year.

Economists expect the BoE to keep its main interest rate at a 16-year high of 5.25% later on Thursday, but many think a first rate cut could come as soon as next month as consumer price inflation returns to its 2% target.

However, the BoE has worries about ongoing big rises in wages and services prices that could push inflation higher, and financial markets only expect it to make two quarter-point rate cuts this year, starting in August.

(Reporting by David Milliken, editing by Andy Bruce)