Typical British Terraced Housing Market in Mumbles, Swansea Bay, Wales, UK Impacted by Surge in Mortgage Rates

“Mortgage Rate Surge Hits UK’s Property Market Recovery, Rics Survey Shows”

The UK’s property market recovery has been dealt a blow by a surge in mortgage rates as lenders continue to hike costs for prospective homeowners. According to a survey by The Royal Institution of Chartered Surveyors (Rics), new home buyer inquiries fell back in April after three consecutive months of increases.

A net balance of 1% of property professionals reported a decline in new buyer inquiries, following a balance of 6% reporting an increase in March. The regional feedback on buyer demand is mixed, with a notable loss of momentum mainly seen in London and southern parts of England.

Buyers have become more cautious due to rising mortgage rates, leading to a slump in house prices last month. A balance of 5% of professionals reported prices falling rather than rising in April, unchanged from the previous month.

Simon Rubinsohn, chief economist at Rics, commented on the survey findings, stating, “Feedback to the latest survey demonstrates the sensitivity of the sales market to interest rates at the present time, given the continuing challenge around affordability.”

Despite the current challenges, there is optimism that activity in the market will pick up in the latter part of the year and into 2025. Virtually all parts of England returned either a flat or marginally negative reading for house prices, while Northern Ireland and Scotland continued to see an upward trend in property values.

Looking ahead, a net balance of 33% of professionals expect house sales to rise over the coming year. Additionally, there has been an increase in new instructions to sell during April, representing the most positive figure since September 2020.

In the lettings market, tenant demand is losing momentum while landlord instructions remain scarce. Average stock levels have reached a three-year high, with 43 properties per branch.

The survey highlights the impact of rising mortgage rates on the UK’s property market and the cautious optimism for future market activity.