UK house prices increased for the first time in two years in September as expectations about future interest rate cuts lifted housing market activity, survey data published by Royal Institution of Chartered Surveyors, or RICS, showed Thursday.
The house price balance rose to 16 percent in September from a flat result in August. The balance turned positive for the first time since October 2022.
The survey also showed that demand, sales and new listings all returned to growth in September. Demand from buyers posted +14 percent, which was the third positive growth in a row.
Sales sentiment increased in September, but the balance was moderate at 5 percent. A net balance of 23 percent said the sales market will continue to grow over the next three months, while longer-term twelve month growth sentiment was even stronger at 45 percent.
Suggesting a readily available supply of property for sale, the balance for new listing rose to 22 percent from 9 percent in the previous month. Respondents cited potential increase in Capital Gains Tax encouraging homeowners to list their properties for sale.
Regarding the lettings market, the survey showed growing difficulties for renters as demand continued to grow and outstrip supply.
RICS Head of Market Analytics Tarrant Parsons said, “The latest survey results once again convey a brighter picture for housing market activity, with the recent easing in mortgage interest rates continuing to support a recovery in buyer demand.”
“Critical for the outlook, a further unwinding in monetary policy is anticipated over the months ahead, which should create a more favorable backdrop for the market moving forward,” Parsons added.
The Bank of England had kept its benchmark rate at 5.00 percent in September after cutting the rate by a quarter-point at the August meeting. The bank is expected to lower the rate by another 25 basis points at its next meeting in November.
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