UK housing market stabilises but high rates still weigh

Britain’s property market saw some recovery in November as a surge in mortgage rates eased, but surveyors remain cautious about the year ahead, an industry survey showed on Thursday, adding to other signs of a stabilisation in the market.

The Royal Institution of Chartered Surveyors (RICS) said its measure of new buyer enquiries rose to a net balance of -14 last month from upwardly revised -25 in October. November’s reading was the least weak since +1 in April last year.

A gauge of agreed sales ticked up to a net balance of -11 per cent in November, up from -23 per cent in October.

Simon Rubinsohn, chief economist at RICS, said buyer enquiries were stabilising amid expectations that interest rates had peaked.

However, surveyors were still cautious over the downbeat outlook for Britain’s flat-lining economy and the prospect of borrowing costs remaining elevated for some time.

The Bank of England is expected to hold interest rates at a 15-year high of 5.25 per cent on Thursday. Investors are almost certain that borrowing costs have peaked but BoE officials say it is too early to cut rates because inflation is not yet quashed.

The signs of improvement in RICS’ survey echoed recent data from mortgage lenders Nationwide and Halifax which showed month-on-month rises in house prices after a run of falls.

The RICS house price balance – measuring the gap between the share of surveyors seeing rises and those seeing falls – rose to -43, up from a revised reading for October of -61.

A Reuters poll of economists had pointed to a much smaller recovery to -57.

Survey respondents expected prices to face further downward pressure in the next three months but to be broadly stable in the year ahead.

The outlook for sales activity in the year ahead was the most upbeat since January last year.

In the lettings market, demand continued to rise although at the slowest pace since January 2021 and rents are projected to rise by around 4 per cent over the year to come.