UK housing market risks being derailed by trade war
The Royal Institution of Chartered Surveyors says its gauge of buyer demand plunged deeper into negative territory in March to its lowest since September 2023
[LONDON] The UK housing market is in danger of being “blown off course” by US President Donald Trump’s trade war, estate agents warned after activity weakened sharply last month.
The Royal Institution of Chartered Surveyors (Rics) said its gauge of buyer demand plunged deeper into negative territory in March to its lowest since September 2023, with activity expected to dip further in the next three months.
Meanwhile, an index of house prices dropped nine percentage points to 2, the lowest since August and well below the median expectation of economists. It suggests prices have stagnated, and agents expect values to come under further “downward pressure” in the near term, Rics said in a survey published Thursday.
Chief economist Simon Rubinsohn said price and sales expectations for the next 12 months are more positive but warned all that could change if the turmoil unleashed by Trump’s tariff announcements on April 2 escalates. The survey was carried out March 20 to April 4, meaning some responses captured the immediate reaction.
“The impact on the market will in no small part depend on how the economy is affected by the emerging trade war and the response of the Bank of England to the shifting environment,” Rubinsohn said. “For now, it is noteworthy that the longer-term Rics expectations are still relatively resilient, but they have the potential to be blown off course if the tariff headwinds intensify.”
The “slew of negative macro newsflow” in recent weeks put further pressure on a housing market that was already slowing as buyers ran out of time to complete transactions before stamp duty, a property tax, went up on April 1. Halifax reported a second consecutive fall in house prices in March, while Nationwide Building Society showed values stagnated for the first time in seven months.
On Wednesday, UK borrowing costs surged to the highest since 1998 as the market chaos of recent days continued to reverberate around the world.
In a boost for homeowners, mortgage costs have fallen close to a two-year low as investors start to price in the possibility of a major rate-cut from the BOE next month to counter the fallout. However, the risk of a global downturn and speculation that Chancellor of the Exchequer Rachel Reeves will have to raise taxes again in the autumn to balance her budget will weigh on sentiment.
“The first few days of April are feeling quieter probably because the energy has been sapped out of the market and people are awaiting President Trump’s next move,” Christoper Clark, a surveyor at Ely Langley Greig in Hampshire, said in comments accompanying the report. BLOOMBERG
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