Yahoo Finance UK house prices: Sales surge despite interest rate rise
Britain's property market shrugged off the Bank of England’s (BoE) interest rates hike after sales soared in February as momentum in the sector strengthened slightly.
According to the latest RICS residential market survey, new buyer enquiries and agreed sales picked-up in the month despite the increase in rates and mounting concern over rising energy prices.
A net balance of 17% of survey participants said they had seen a jump in new buyer enquiries. This is the sixth time in a row an increase has been reported and the strongest it has been over this period, RICS said.
The survey showed that the number of agreed sales also improved in the same period, with a net balance of 9% saying sales of homes were increasing. This was the strongest reading since May 2021.
Looking ahead, RICS expects sales to increase in the next quarter, although at a slower pace. Respondents also expect sales to remain on an upward trajectory over the coming year.
Meanwhile, the body said protracted deterioration in the volume of new sales instructions coming onto the market has stabilised, with net balance moved to -4% from -7% previously.
Respondents anticipate a further rise in national house prices both at the three and 12-month time horizons.
"Interestingly, these price expectations have actually climbed slightly higher since the first interest rate hike was sanctioned by the Bank of England back in December," RICS said.
Read more: Rightmove predicts UK property market boom after record 2021
However, despite the sentiment experts say the trend is unlikely to last and could exacerbate challenges for lower income households amid soaring energy prices, the cost of living crisis and geopolitical tensions.
"Huge clouds of uncertainty hang over the economic prospects as energy prices continue to surge and the BoE grapples with how to manage monetary policy in this challenging environment," said Simon Rubinsohn, chief economist at RICS.
He added: "Despite all of this, there is little evidence yet that the mood music regarding the expectations for house prices or rents is shifting. Indeed, the medium-term projections from respondents to the RICS survey are continuing to gain momentum.
"It may well be that these trends ease as the deteriorating macro environment begins to bite but the message that keeps recurring, both for sales and lettings, is there are in aggregate many more prospective purchasers and renters than properties available."
Read more: Surge in mortgage approvals fuels UK property boom
Rightmove (RMV.L), Britain's biggest property website, recently predicted the UK housing market will boom this year, forecasting robust demand even in the face of 30-year high inflation.
Similarly Zoopla's house price index showed that the UK's property sector had the busiest start to the year since 2016, with sales agreed so far this year matching levels seen at the start of 2021.
The average house price now stands at £244,100 – a rise of 7.8% in the year to the end of January, and a rise of around £80,000 over the last decade, according to the property site.
