(Bloomberg) — UK property surveyors expect a jump in home sales in the coming months after the Bank of England cut interest rates for the first time in more than four years.
The Royal Institution of Chartered Surveyors said surveyors, who appraise property, were at their most optimistic since the start of 2020 about sales in the next three months. The figures for July show London was among the regions where estate agents were at their most upbeat on future sales. Optimism on prices nationally also jumped.
The survey released Thursday added to signs of renewed confidence in the UK property market after stubbornly high mortgage rates dampened a recovery in the first half of 2024. The two biggest mortgage lenders earlier this month said house prices are rising again after a lull earlier in the year.
The BOE’s first rate cut since the start of the pandemic is likely to boost confidence among buyers and sellers, with borrowing costs for home owners already edging lower in the run-up to the vote.
Simon Rubinsohn, chief economist at RICS, said the BOE’s pivot toward monetary loosening and the new government’s focus on housing “have shifted the mood music in the sales market, with projections for both near and medium activity picking up.”
“It is far from clear that the Bank of England will follow the August move with further easing over the coming months, but, even so, the policy mix is becoming more supportive for the sector,” he said.
RICS said new buyer inquiries picked up slightly last month, although its survey showed prices still declining despite the renewed optimism.
While the majority of the survey was completed before the BOE decision, expectations of a cut had been building on markets shortly before the BOE decision on Aug. 1. The central bank cut rates from a 16-year high to 5% and signaled it would move cautiously on further reductions.
The average two-year fixed mortgage rate has fallen to 5.74%, down from around 6% earlier in the summer, according to Moneyfacts.
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