LONDON (Reuters) – Britain’s housing market looks set for a sales recovery in the coming months after the Bank of England cut interest rates and the new government shifted its focus to the sector, a survey showed on Thursday.
The Royal Institution of Chartered Surveyors said its gauge of expected sales over the next three months was the strongest since January 2020, just before the coronavirus pandemic hit Britain.
“The new government’s focus on boosting housing development coupled with the recent quarter point cut in key interest rates appears to have changed the mood in the sales market,” said Simon Robinson, chief economist at RICS.
“There are undoubtedly significant challenges ahead in delivering on the ambitions of planning reform, and it is unclear whether the Bank of England will follow up on its August move with further easing in the coming months, but the policy mix has nonetheless become more supportive of the sector,” he added.
The overall picture of the housing market has improved slightly in the past month as mortgage rates fell ahead of the Bank of England’s August 1 cut in borrowing costs from their highest levels in 16 years.
The new buyer enquiries gauge turned positive for the first time in four months and agreed sales also improved.
But the RICS house price index in July fell to -19 from -17 in June. Economists polled by Reuters had expected an improvement to -10.
Other house price data released earlier by mortgage lenders Nationwide and Halifax pointed to a rebound in price growth last month.
The picture was even bleaker in the rental sector, where demand from tenants increased while some supply contracted, pointing to further rental price increases in the future.
Robinson said the results reflect what he called an “increasingly hostile environment for investment in the sector.”
The new administration has adopted the previous government’s belated plans to tighten no-fault eviction rules, which has alarmed some landlords, while changes to tax and energy efficiency rules have added to their costs in recent years.