Surveyors Report First Increase in House Prices in Almost 2 Years

September 12, 2024 TruthUSA

The property sector is expected to experience an increase in new appraisals, enhancing options for new buyers.

House prices have started rising after nearly two years of decline, as shown in a surveyors’ report.

A recent drop in mortgage interest rates has driven this shift in the housing market. The Bank of England (BoE) reduced the interest rate from 5.25% to 5% in August, marking the first rate cut in over four years.

The RICS Residential Survey indicates that easing inflation and anticipated growth are increasing sales activity and buyer demand.

A higher percentage of surveyors (15%) have observed an improvement in buyer demand, with 1% reporting price increases rather than declines in August.

Moreover, 14% predict a gradual rise in house prices over the next three months.

“The latest RICS survey shows an improvement in sentiment over the last month due to the slight decline in mortgage rates, leading to an increase in buyer interest, albeit from a relatively low base, and a slight uptick in stock levels,” said RICS chief economist, Simon Rubinsohn.

The growing demand aligns with a slight increase in the supply side. There is an expectation for a rise in the number of new appraisals, providing more options for potential buyers.

Cuts and New Homes

RICS emphasized the need for realistic pricing to close deals amidst uncertainty over future interest rate cuts and upcoming Autumn Budget announcements.

The BoE will announce the new interest rate on September 19, maintaining a tight fiscal policy until inflation reaches the 2% target sustainably.

Simultaneously, the Autumn Budget is anticipated to include cuts in public funds following the revelation of a “£22 billion black hole” in the nation’s finances.

To address the housing crisis, Labour has initiated an expert group to expedite planning system reform. Plans involve the construction of up to 300,000 new homes on 200 large sites, including three stalled sites in various regions.

As many families struggle with housing costs, the initiative aims to alleviate the burden.

Rental Sector

Rent prices are projected to continue increasing due to ongoing market shortages, as indicated by 39% of survey respondents.

RICS noted a consistent interest from renters, although growth in August was slower compared to previous months. This slowdown coincides with a decrease in available rental properties, with fewer landlord instructions.

“Affordability remains a concern in the sales market despite more affordable financing. This issue is more pronounced in the rental market due to diminishing rental stock. Landlords reducing their portfolios will exacerbate the existing market imbalance,” Rubinsohn explained.

Government plans to ban Section 21 “no-fault” evictions by summer will impact the rental market. The plans are part of the Renters’ Rights Bill, recently introduced in Parliament.

Although initially proposed by the Conservative government, the “no-fault” evictions ban faced delays due to concerns raised by several Tory MPs about its impact on landlords and the rental sector.

Labour views reform in the sector as long overdue and plans to enhance the system for England’s 11 million private renters and 2.3 million landlords.

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