UK house prices are now stable, but surveyors have cautioned that although more sellers are putting their properties on the market, the stance remains vigilant due to the continuous uncertainty around interest rate reductions.
The UK Property Market Shows Signs of Growth Amidst Mortgage Market Uncertainty
According to the Royal Institution of Chartered Surveyors (RICS), over 21% of property experts claimed that the new selling instructions are heading more upwards than downwards, marking the highest reading since October 2020.
The average number of properties in estate agents’ branches was 42, which is the most since 2021, as per RICS recordings. Those surveyed also reported that there was an increase in market rankings throughout the month as compared to the same period the previous year.
Head of personal finance at Hargreaves Lansdown and Yahoo Finance UK contributor Sarah Coles cautioned that the property market may still be having difficulties despite the positive statistics.
She declared, “The housing market inspired more confidence in February, as buyers slowly resurfaced, and optimism rose among estate agents. However, given the broader picture, there’s still a risk that February may not have been flying after all. It could just have been falling with style.”
According to figures from the Bank of England, the value of outstanding mortgage balances with arrears climbed by 9.2% from October to December compared with the previous quarter, reaching £20.3bn. This represents a 50.3% increase over the same period last year.
“There’s also less positive news from the mortgage market in recent weeks. Many of those agreeing sales at the moment will have agreed their mortgages back when rates were slightly lower. Since then, the market has reassessed the chances of an imminent rate cut, and put mortgage rates up.
“The average 2-year rate dropped from 5.93% on the 2 January to 5.56% at the end of the month, according to Moneyfacts. However, by the end of February, the average 2-year mortgage rate was back up to 5.75%. It could stifle demand as the impact feeds into the market,” Coles later added.
Home Sales Remain Low Amid Stable UK House Prices
New buyer inquiries rose across the UK for the second consecutive month, with a net balance reaching 6% of experts noting an increase rather than a decrease.
According to the research, during the last two months, buyer interest has recovered in the majority of UK regions.
Nevertheless, home sales were considerably low in February, with 3% of experts reporting a fall rather than a rise.
Simon Rubinsohn, RICS chief economist, argued: “The February RICS survey provides some grounds for encouragement around the sales market, with not just buyer interest staying positive for the second successive month but also the uplift in new instructions to agents.”
The report said that sales activity is expected to continue gaining speed over the next year, with optimistic prospects for the near future.
The markets had anticipated just under three full cuts before the data was released, but they are now pricing in three 0.25% reduction from the Bank of England by the end of the year.
Tenant demand in the lettings market is still growing, though more slowly than in the past, according to RICS.
However, there are still fewer and fewer landlord guidelines at the same time. Though at a slower pace, experts anticipated that rents will rise in the upcoming months.
