Bank of England raise rates for twelfth successive month to 4.5%
High borrowing costs and an uncertain economic outlook are stifling momentum in the UK housing market, RICS has said.
According to the organisation鈥檚 April residential survey buyer was down to -37% on its index, a slump against the -30% reading recorded in the past two reports.
The surveyors鈥� body noted that the figure was not quite as downbeat as the -43% figure posted in January but was consistent with a renewed drop in buyer enquiries.
Almost all regions of the UK experience negative or flat home buyer demand, except Northern Ireland which saw a marginal rise.
RICS chief economist Simon Rubinsohn said: 鈥淎lthough the newsflow around housing does appear to have steadied over the past month, key indicators from the RICS survey point to a series of challenges in both the sales and lettings space.
鈥淢ost notably, buyer demand still appears to be subdued in the face of relatively high borrowing costs, the prospect of at least one more interest rate hike and ongoing affordability challenges.鈥�
Earlier, the Bank of England issued its 12th successive raise in base interest rates from 4.25% to 4.5%, the highest level in almost 15 years.
Rubinsohn said there remained a stark imbalance between demand and supply in the letting market despite significant rent rises and that increased supply would be 鈥渃ritical to addressing both areas of the market鈥�.
鈥淗owever, indicators of the level of new housing starts in the early part of the year suggests that the picture is if anything continuing to soften as housebuilders activity reflects both macro uncertainty and policy developments,鈥� he added.
RICS UK Residential Market Survey explained
The RICS UK Residential Market Survey is a monthly sentiment survey of chartered surveyors who operate in the residential sales and lettings markets. Surveyors are asked 18 questions on a range of metrics such as sales, enquiries, listings and house prices and are asked whether these have increased, stayed the same or decreased.
The 鈥榥et balance鈥� refers to the proportion of respondents reporting a rise in a metric minus those reporting a fall.
For example, if 30% reported an increase in buyer enquiries and 5% reported a fall, the net balance would be +25%.
Survey respondents cited an overall flat picture for April, with net balance declining slightly to -4% from -6% in March.
House prices remained in negative territory (-39%) but were an improvement on the -43% and -47% recorded in previous months.
Price expectations are improving on the lows of last year, with the net balance up to -16% from March鈥檚 -24%.
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