Stay informed with free updates
Simply sign up to the UK property myFT Digest — delivered directly to your inbox.
The UK property market is showing signs of life following the general election and the Bank of England’s first interest rate cut in more than four years, but the jobs market has yet to strengthen, according to data released on Thursday.
The Royal Institution of Chartered Surveyors said its monthly survey of estate agents pointed to “a meaningful pick-up in sales volumes going forward” in July, with more respondents expecting both sales and prices to rise in the near term and over the year ahead than in June.
But no such post-election bounce was visible in a separate poll of recruiters, who reported fewer people placed in both permanent and temporary roles in July, with vacancies still in decline and more candidates looking for jobs after being made redundant.
Rics said that although recent activity in the residential market has also been relatively flat, confidence that sales would increase in the next three months was stronger than at any time since 2020.
The professional body’s sales expectations net balance — a measure of the difference between the percentage of estate agents expecting rises and falls — rose from 22 per cent in June to 30 per cent in July.
“The new government’s focus on boosting housing development alongside the recent quarter-point base rate cut does appear to have shifted the mood music,” said Simon Rubinsohn, Rics chief economist.
But he added there would be “significant challenges” in delivering its intended planning reforms, and that it was “far from clear” whether the BoE would follow its August rate cut — which lowered the central bank’s benchmark rate to 5 per cent — with further reductions in the near term.
The cautious optimism of the Rics survey comes after lender Halifax said on Wednesday that house prices had risen by 0.8 per cent in July, following three relatively flat months.
The increase — which came in above analysts’ forecasts of a 0.3 per cent rise — took annual price growth on Halifax’s measure to its highest reading since January at 2.3 per cent.
Amanda Bryden, head of mortgages at Halifax, said recent reductions in mortgage rates on the back of the BoE’s rate cut were “encouraging”, but that prospective homeowners would still struggle with “affordability constraints and the lack of available properties”.
Barclays, HSBC and NatWest are among lenders to have announced cuts to some of their key fixed rate mortgage products this week, leading to hopes that competition will drive down borrowing costs.
“The battle for market share among the large lenders . . . is fantastic news for borrowers,” said Hina Bhudia, partner at broker Knight Frank Finance.
However, the more upbeat mood in the residential sales market contrasted with gloomy reports from letting agents. Rics said landlords were still exiting the market, with the flow of listings coming on to the rental market “deteriorating”.
Tenant demand was still growing but had softened compared with June. This meant that while rental prices were still likely to rise, letting agents’ expectations were at their lowest since early 2021.
Meanwhile, the monthly report from trade body the Recruitment & Employment Confederation and advisory firm KPMG — which the BoE has watched closely since problems with official jobs data started — showed recruiters had placed fewer candidates in permanent jobs than the previous month in all regions except London.
Recruiters also reported a continuing decline in demand for permanent staff, with vacancies falling more sharply in the public sector, in IT and computing and in executive and professional roles. Meanwhile, more candidates were coming forward for roles after being made redundant.
Jon Holt, chief executive and senior partner at KPMG in the UK, said the figures had been gathered before the BoE’s interest rate cut, but that “despite the stability of a new government and easing inflationary pressures, employer confidence to recruit has not yet returned”.
