Britain’s housing market picked up in February but property surveyors said uncertainty over the Bank of England’s interest rates path could temper demand, a closely watched industry survey showed on Thursday.
The Royal Institution of Chartered Surveyors (RICS) gauge of new buyer enquiries rose to a net balance of +6 last month, the same as a downwardly revised +6 in January, and marking the joint-strongest reading since February 2022.
Its measure of house prices, while still negative, rose to its highest since October 2022 at -10% from -18% in January.
Economists polled by Reuters had pointed to a reading of -11%.
Simon Rubinsohn, RICS’s chief economist, said the survey was encouraging.
Thursday’s survey adds to recent signs of stabilisation in Britain’s housing market, partly driven by easing high inflation and after interest rates weakened buyer demand in 2023. Last week, mortgage lender Halifax reported the fifth consecutive rise in house prices in February.
RICS said new instructions coming to the market also increased, with the net balance of +21 surveyors reporting rising new instructions to sell – the strongest reading since October 2020, when Britain’s property sector, like those in many Western Countries, boomed during the COVID-19 pandemic.
However, it said surveyors remained cautious about the sector’s outlook.
“The near-term outlook is still somewhat cautious reflecting, in part, the suspicion that the recent easing in mortgage rates is likely to stall on the back of ongoing uncertainty about the timing and speed of interest rate reductions,” the report said.
A gauge of agreed sales ticked down to a net balance of -3 in February, although respondents to the RICS survey expected sales activity to strengthen in the coming year.
In the lettings market, demand ticked up and rents are projected to rise over the coming months, although the pace of increases is expected to slow.
“There are signs that the relentless upward trend in private rents is losing momentum but fresh demand is still comfortably outstripping supply in this area which suggests there is unlikely to [be] any significant relief for tenants,” Rubinsohn said.
