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Economic News

UK housing market shows signs of stabilising - Rics

By Abigail Townsend

Date: Thursday 18 Jan 2024

LONDON (ShareCast) - (Sharecast News) - The UK housing market showed signs of stabilising on Thursday, as mortgage rates continued to ease.
According to latest UK Residential Market Survey from the Royal Institution of Chartered Surveyors, the net balance of respondents reporting a rise in house prices over the three months to December was -30.

Although still firmly in negative territory, it was a notable improvement on November's -41 and above consensus expectations of -38.

The new buyer enquiries balance also strengthened, to -3 from -13, the highest since April 2022, while the new instructions balance edged into positive territory, up from -4 at 1.

The agreed sales balance was -6 - the highest since March 2022.

However, unsold stock remained high, with the average number of properties on an estate agent's books ticking up to 38.9, a 30-month high.

The UK housing market has been hit hard by the cost of living crisis and surging borrowing costs.

Interest rates currently stand at 5.25%, a 15-year high, while mortgage rates soared in response to the government's disastrous mini budget in September 2022.

However, mortgage rates have now begun to ease notably, and with inflation off its peak, most analysts agree that the Bank of England's next move will be to trim the bank rate.

Tarrant Parsons, senior economist at Rics, said: "Supported by an easing in mortgage rates of late, buyer demand has now stabilised, and this is expected to translate into a slight recovery in residential sales volumes over the coming months."

Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: "December's Rics survey adds credence to our view that house prices will bounce back this year.

"The net balance expecting prices to rise over the next 12 months rose to a 17-month high of -13, from -23, and is consistent with a return to positive year-over-year growth in the official measure of house prices in the coming months.

"So after a 5% peak-to-trough, with the nadir coming in the first quarter, we still expect the official measure of house prices to rise by at about 5% over the final three quarters of 2024."

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