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House prices look to be rising for the first time in almost two years, according to surveyors.
August marked the first time since October 2022 that a key metric of price growth moved into the green, the Royal Institution of Chartered Surveyors (RICS) said.
The RICS’s House Price Balance weighs the number of professionals who report seeing rises in house prices against those who see falls. A net balance of one per cent reported price rises in August, up from a trough of -67 per cent in August 2023.
A healthy 14 per cent balance of professionals predicted a steady increase in house prices over the next three months.
This positive litmus test comes as many lenders cut their mortgage rates in recent weeks, and after the Bank of England cut base rate from 5.25 per cent to five per cent at the start of August – the first reduction of 2024.
The RICS survey indicated a rise in people looking for homes to buy, possibly spurred on by the Bank of England’s base rate cut, and an according slight increase in the supply of properties for sale.
Renters still face a gloomy outlook as demand from tenants continued to grow in August whilst the supply of rental properties remained sluggish. There was a fall in the number of new landlords instructing estate agents, according to the survey.
There was a strong feeling amongst respondents that this squeeze would continue to drive up rental prices, with a net balance of 39 per cent of professionals predicting rent increases in the coming months.
The chief economist of the RICS, Simon Rubinsohn, said the latest survey “captures an improvement in sentiment” over the past months, after a “modest decline in mortgage rates, with buyer interest improving, albeit from a relatively low base, and stock levels edging up”.
Rubinsohn emphasised, however, the need for “realistic pricing to get deals done”. He said there is “uncertainty both around the scope for further interest rate cuts and the likely contents of the forthcoming Budget keeping the mood in check”.
He also warned: “Affordability remains an issue in the sales market, even with somewhat cheaper finance now available, but the picture appears even more acute in the lettings market where the amount of rental stock continues to diminish.
“Contributors continue to point to landlords looking to scale back their portfolios, which will inevitably increase the imbalance that already exists in the market.”
Of those looking to move, around half would be interested in a low-carbon home, according to another piece of research by KPMG.
The organization surveyed 2,000 people across the UK, of which 49 per cent indicated they were interested in making the environmental choice.
Reduced bills, less wasted energy, and a desire to address climate change were amongst people’s motivations. The same survey found that almost two-thirds of people believed UK households need to reduce their home emissions.
However, the UK apparently lacks knowledge about environmentally-friendly options, as 37 per cent of respondents reported knowing nothing about heat pumps. Half of respondents believed solar panels and heat pumps would reduce energy bills, and over a third thought they would make homes more comfortable.
