A lack of momentum in the UK housing market could make it harder for the Bank of England to raise interest rates next month, according to economists at RICS, The Royal Institution of Chartered Surveyors.
The results of RICS’ latest Residential Market Survey continue to point to subdued activity at the national level, as agreed sales and new buyer enquiries fell for the 12th consecutive month in March.
Much of the weakness stems from London and the South East, while prices continue an upward drift in all other parts of the UK, with Northern Ireland, Wales and the East Midlands seeing the strongest pick-up.
At the national level, the near term outlook for prices remains flat, with three month expectations stuck in relatively neutral territory. Surveyors predicted that in a year’s time, house prices would be higher, particularly in the North West of England, Wales and Scotland. London remained the only region in which surveyors expected prices to be lower a year from now.
Simon Rubinsohn, chief economist at RICS, said that there was little sign of any potential pick-up in buyer demand.
“Apart from the implications this has for the market itself, it also has the potential to impact the wider economy, contributing to a softer trend in household spending,” he said.
“This could make Bank of England deliberations around a May hike in interest rates, which is pretty much odds-on at the moment, a little more finely balanced than would otherwise be the case.”
Many respondents to the RICS survey blamed the slow start to the season on bad weather, while others cited a general lack of confidence stemming from economic uncertainty. One quarter of respondents believe Help to Buy is causing difficulties for second steppers, as potential purchasers of their properties have a greater incentive to buy a new build home.
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