How Iran war is affecting ‘volatile’ UK housing market
The UK housing market is struggling with a significant lack of momentum as persistent global and economic uncertainties continue to weaken homebuyer confidence.
The Royal Institution of Chartered Surveyors (Rics) said that although the year initially started with some encouraging signs, confidence was rapidly weakening as concerns about inflation increased, interest rates rose and international instability increased.
New buyer inquiries saw a significant drop in February; 26 percent of real estate professionals’ net balance reported a decline worse than the 15 percent recorded in January.
Agreed sales also remained low; A 12 percent decrease in the net balance of professionals was noteworthy.
Pollsters predict that the decline in sales activity will continue in the near future. But the long-term outlook looks more robust, with 17 percent of net balance professionals expecting sales to rebound in the next 12 months.
Rics said house prices remained generally stable in February, with 12 per cent of professionals reporting a decline in their net balance, but there were large regional differences.
According to the report, downward price pressure is particularly strong in London, the South East and East Anglia, while Northern Ireland, Scotland and North West England still report stronger price trends.
Looking ahead, pollsters have become more cautious about house prices in the near term, but looking ahead to the next 12 months, 33 percent of professionals expect net residual prices to rise further.
But expectations for house prices in London over the next 12 months have “decreased sharply”, according to the report.
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On the supply side, new orders remained generally stable in February; This shows that there is no immediate change in the new stock line.
Tenant demand in the rental market was generally stable in the three months to February, but landlord instructions were “firmly negative” and pointed to a shortage of rental housing. The report stated that professionals expect rents to increase overall in the next three months.
Mortgage lenders are withdrawing deals and increasing rates as swap rates rise amid growing concerns about rising prices amid conflict in the Middle East.
Financial information website Moneyfactscompare.co.uk said on Wednesday that recent days had been the most turbulent in the UK mortgage market following the September 2022 mini budget.
Some average mortgage rates on the market have also surpassed the 5 percent mark as lenders scramble to make changes.
Tarrant Parsons, head of market research and analytics at Rics, said: “February’s survey highlights renewed volatility in the market.
“While activity indicators at the beginning of the year pointed to a temporary improvement, the deterioration in the geopolitical environment clearly put pressure on confidence.
“The recent increase in oil and energy prices has also increased the possibility that mortgage loan interest rates will remain high for a longer time.
“As a result, short-term expectations have softened. Although the overall 12-month outlook remains positive, maintaining this trend will depend on the easing of the recent rise in inflationary pressures in the coming months.”
