British property surveyors were less pessimistic about the state of the housing market in March, as fewer reported house prices falling and the majority expected sales to rise over the next twelve months, new data showed.
The Royal Institution of Chartered Surveyors’ house price balance, released on Thursday, went up to minus 43 per cent last month, from a revised minus 47 per cent in February. The monthly index tracks the share of surveyors reporting an increase or drop in house prices.
Britain’s housing market has slowed in recent months, as rising household bills and a surge in borrowing costs deterred buyers and suppressed demand for new homes.
While still in negative territory, which suggests that prices continued to dip, the house price balance ended 10 successive months of decline in March.
The slowdown in the housing market follows a series of interest rate increases by the Bank of England as it tries to tame inflation, which reached a 41-year high last October amid rising fuel and food prices.
The central bank increased rates in March by a quarter of a percentage point to 4.25 per cent, marking the 11th consecutive increase.
Simon Rubinsohn, chief economist at Rics, said: “The medium-term outlook [for the housing market] is looking a little more settled, helped by the perception that the interest rate cycle may be near the peak.”
While the majority of surveyors expected house prices to fall further in the coming year, the index measuring expectations stood at minus 24 per cent, reaching its highest level since September 2022, when former prime minister Liz Truss’s tax-cutting “mini” Budget triggered a temporary spike in borrowing costs.
“Supply, demand and sales volumes are gradually recovering as buyers and sellers come to terms with higher mortgage rates but prices are likely to fall by a few per cent as more distress enters the system,” said Tom Bill, head of UK residential research at Knight Frank.
Surveyors’ twelve-month outlook for the number of agreed sales also improved, with the net balance rising to 1 per cent, the first time this measure went above zero since March last year.
“It has been a challenging time to get sales over the line,” said Jo Eccles, founder of high-end London buying agents Eccord. She said the gap between buyers’ hopes for big discounts and the prices sellers will accept has been a barrier to sales of top-end London homes this year.
She said one US client had been looking to buy in the capital because they expected “blood on the street” but in reality few sellers had been cutting prices. House market conditions are improving this month as “there is more realism on both sides”, she added.
The Rics report comes a week after mortgage provider Halifax reported that UK house prices unexpectedly increased by 0.8 per cent in March, with resilience spurred by an easing of mortgage rates and the tight labour market.
But Halifax’s figures contrast with data from Nationwide, another lender, which registered a 3.1 per cent annual rate fall in March, the steepest drop since 2009.
“Respondents continue to anticipate rents being squeezed higher,” said Rics, noting that in the year ahead, surveyors are pencilling a roughly 4 per cent rise in rental prices at the national level, nearing highs seen in early 2022.
