Market Analysis

UK Property Surveyors Anticipate Increase in House Sales Later in 2024

Amos Simanungkalit · 09 May2.2K Views

British property surveyors anticipate a surge in property sales in the latter part of this year, despite facing headwinds from elevated borrowing costs. The Royal Institution of Chartered Surveyors reported that the number of homes put up for sale increased at the fastest rate since September 2020.

In April, the main house price balance remained at -5, unchanged from March, due to the diminishing likelihood of an early Bank of England rate cut, which pushed up mortgage costs. Nonetheless, there were indications of growing transaction volumes, aligning with recent Bank of England data showing a 20% yearly increase in mortgage approvals in March, reaching an 18-month high.

Although RICS' aggregate sales balance in April reached its highest level since May 2021, the net balance for new buyer enquiries dipped below zero for the first time in four months.

Simon Rubinsohn, Chief Economist at RICS, attributed the stagnation in buyer enquiries to a slight uptick in mortgage pricing. However, there remains a prevailing belief that market activity will ramp up later in the year and into 2025, regardless of any political uncertainties surrounding the upcoming general election.

House purchases experienced a sharp decline following the budget plans of former Prime Minister Liz Truss in September 2022, which unsettled lending markets. Prices had also tapered off after surging by 25% since the onset of the COVID-19 pandemic. Truss' successor, Rishi Sunak, is required to hold a national election no later than January 2025.

Halifax, a mortgage lender, noted on Tuesday that prices had stabilized since the beginning of the year. Economists anticipate that the Bank of England will maintain its main interest rate at a 16-year high of 5.25% on Thursday, with speculation rife that a rate cut could occur as early as next month as consumer price inflation edges closer to its 2% target.

However, the Bank of England remains concerned about persistent spikes in wages and services prices, which could push inflation upwards. Financial markets anticipate only two quarter-point rate cuts this year, with the first expected in August.