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UK housing market shows signs of slowdown - RICS

·2-min read
Residential housing in south London

LONDON (Reuters) - Britain's housing market showed signs of a slowdown in May as fast-rising inflation and higher interest rates tightened the financial squeeze for many households, according to a survey published on Thursday.

The Royal Institution of Chartered Surveyors (RICS) said its new buyers gauge fell to -7 from +8 in April, the first time it turned negative in nine months.

"The increase in the cost of mortgage finance alongside growing concerns about the economic outlook is unsurprisingly having an impact, albeit a relatively modest one at this point," Simon Rubinsohn, RICS Chief Economist, said.

The Bank of England has raised interest rates four times since December and is expected to do so again next week, taking Bank Rate to 1.25%, despite a weak outlook for economic growth.

The Organisation for Economic Co-operation said on Wednesday that Britain's economy would grow by 3.6% this year before flat-lining at 0.0% next year, the weakest forecast for 2023 among all countries in the Group of 20 with the exception of Russia.

RICS said expectations for residential property sales over the next three and 12 months deteriorated after showing little change in May.

Prices were propped up by the long-standing shortage of properties coming onto the market.

RICS said there was a +73 percentage-point difference between the proportion of surveyors reporting rising prices and those reporting a fall. That was down from +80 in April but was in line with the average over the last six months.

A Reuters poll of economists which had pointed to a smaller fall to +76.

Further ahead, a net balance of +42 saw house prices being higher in a year's time, the weakest reading since January 2021.

Data published on Wednesday by mortgage lender Halifax showed the annual pace of house price increases in Britain slowed in May for a third month in a row.

(Reporting by William Schomberg, editing by Andy Bruce)

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