Rate hike fears weigh on UK housing market, RICS says

Last month, concerns over potential interest rate hikes dampened Britain's housing market, according to the Royal Institution of Chartered Surveyors (RICS). The institution reported that the house price balance dipped to -32, marking a decline from its five-month peak of -28 in August. This decline surpassed expectations from a Reuters poll of economists. Furthermore, the number of new properties entering the market surged for the first time since mid-last year.

RICS Head of Market Research Tarrant Parsons attributed the increased caution among buyers to the intensifying rate expectations. While RICS members anticipate further price drops over the next three months, they expect stability within a year. Notably, London experienced the most negative price balance, while Scotland and Northern Ireland reported rising prices.

Financial markets projected the Bank of England (BoE) to raise rates in November and an additional three times in 2027, though such forecasts earlier this year proved inaccurate. RICS noted a decline in new buyer enquiries for the first time since March, though this figure remains above the low reached post-U.S.-Iran war. The net balance for rents, influenced by rising demand from tenants and fewer properties from landlords, surpassed its average in the first half of the year, albeit lower than in August.

Mortgage lender Lloyds reported stagnant house prices in September, while Nationwide experienced a minor unexpected drop. According to the Office for National Statistics, private-sector housing rents in the UK rose by 3.8% annually in August and house prices increased by 1.4% over the past year.