Home News Although Prices Remain Elevated, ‘Storm Clouds Are Visible’ in the U.K. Housing Market

Although Prices Remain Elevated, ‘Storm Clouds Are Visible’ in the U.K. Housing Market

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The UK property market has lost momentum as interest rates and economic uncertainty have slowed buyer activity.

First of all, the phone is no longer off-hook for most realtors. Interest from new buyers is declining, according to respondents to the latest housing market survey released Thursday by the Royal Institute of Chartered Surveyors (RICS).

This is the third straight month of decline, according to the survey, with new buyer inquiries trending downward across all regions of the UK.

RICS chief economist Simon Rubinson said: “The turmoil in the mortgage market in recent weeks has exacerbated rising economic uncertainty stemming from rising energy prices and the cost of living crisis, pushing the housing market dial. “We are shifting,” the report said.

Additionally, the data shows that a majority of those surveyed said sales remained weak in September. Further interest rate increases over the next six months are “expected to outweigh the potential increase from the reduction in stamp duty,” the report said.

Late last month, the UK government announced changes to the stamp duty land tax. Raises starting threshold to £250,000 (US$277,208) on the price of a home and adding even more tax breaks for first-time buyers, Mansion Global reported.

Inventories have also remained at historically low levels, with the average agent representing just 34 homes, the study said. Meanwhile, “the pipeline appears to have deteriorated further,” according to the report, which bodes well for listings as a larger proportion of agencies report declining home valuations.

A shortage of supply has kept property prices high, but growth has slowed, according to the study. Home price growth in September was less than half what it was in the spring. Meanwhile, price expectations for next year are now in negative territory, with a majority of respondents expecting prices to fall over the next 12 months.

“Although the headline price balance remains in positive territory for now, there are storm clouds in the near-term deterioration of expectations for both prices and sales,” Rubinson continued. “Looking further ahead, the picture portrayed by the RICS survey has clearly shifted in the negative direction. While partly dependent on circumstances, it is difficult not to assume further pressure on the housing sector as the economy adapts to higher interest rates and tightening labor markets are beginning to reverse. “

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