UK housing demand froze in January market turbulence, say agents
The sell-off in bond markets in January temporarily pushed benchmark yields to levels last seen in the 2008 financial crisis and made mortgages more expensive
UK ESTATE agents said interest in buying houses stagnated in January amid the market rout that pushed up the cost of borrowing.
The Royal Institution of Chartered Surveyors’ (RICS) gauge of new buyer enquiries fell for a fifth month to zero, indicating demand neither increased nor decreased over the month. Property surveyors also reported a cooling in agreed home sales.
“Growth in buyer demand lost a bit of momentum through the early part of the year, with this flatter picture likely linked to the turbulence seen across money markets in the first half of January,” said Tarrant Parsons, head of market analytics at RICS.
The sell-off in bond markets in January temporarily pushed benchmark yields to levels last seen in the 2008 financial crisis and made mortgages more expensive. However, rates have since subsided and RICS said agents remained positive about sales and house prices this year, despite headwinds facing the economy.
Demand is still being propped up by a rush to complete transactions before stamp duty, a tax on property transactions, increases in April. The looming deadline is particularly boosting sales of smaller homes in higher-priced areas such as London.
Agents are warning of a slowdown once the thresholds at which buyers pay stamp duty become less generous. London is one of the areas where property surveyors expect house prices to fall over the next three months, while they also see a drop in transactions in the capital in the near future, RICS said.
A NEWSLETTER FOR YOU
Tuesday, 12 pm
Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
Nationally, RICS’ house price index stood at 22 last month, down slightly from December but “still giving a clear signal that aggregate house prices remain on an upward trajectory”.
Buyers received a boost this week as Barclays followed Santander in announcing mortgage rates below 4 per cent, sparking hopes that competition between lenders is heating up. The moves come in the wake of the Bank of England cutting interest rates on Feb 6 and swap rates that determine the price of home loans falling in recent weeks.
“Downwards pressure on mortgage rates has increased slightly over the last month as inflationary jitters ahead of Donald Trump’s inauguration recede,” said Tom Bill, head of UK residential research at Knight Frank. “The return of sub-4 per cent mortgages would strengthen demand, which means a lot hinges on how much financial headroom the government can find and how the UK fares as global trade wars escalate.”
Prime Minister Keir Starmer wants to make housing more affordable by building 1.5 million new homes over five years, a target builders see as ambitious.
On Thursday (Feb 13), the government announced plans for the “next generation of new towns” and said over 100 sites across England had already submitted proposals. Starmer pledged to take on those who oppose new developments being built.
“We are urgently using all levers available to build the homes we need so more families can get on the housing ladder,” he said. “We are sweeping aside the blockers to get houses built, no longer accepting no as the default answer.” BLOOMBERG
Share with us your feedback on BT's products and services
