House prices rise for first time in two years

House prices are edging up for the first time in almost two years as optimism over falling interest rates breathes new life into the property market, according to estate agents.
A majority of agents think prices have risen over the summer as mortgage costs fall from recent highs. At a net balance of 1 per cent, it was a slim majority, but it was the first positive reading that the Royal Institution of Chartered Surveyors has recorded in its monthly survey since October 2022.
Having boomed during the post-lockdown “race for space”, the housing market ground to a halt after Liz Truss and Kwasi Kwarteng’s disastrous mini-budget in September 2022. Prices remained stuck through 2023 and into this year, although there have been signs that the market is moving again as mortgage rates have retreated.
House prices in Northern Ireland and Scotland have been most resilient over the past two years and these remain the places where prices are rising most strongly, the survey found. Agents in “most parts of the UK” are reporting that prices are rising again, although southern England, where prices are highest, is lagging behind, as is Wales.
Most agents polled by the institution expect prices to continue to rise over the coming three months, and the vast majority think house prices will be higher in a year’s time, the most optimistic they have been since April 2022. The consensus is that prices will rise in all parts of the country, “to a greater or lesser degree”.
The survey also showed that estate agents and surveyors are fielding more inquiries from prospective buyers and that sales are also picking up. Most think activity will continue to improve.
Simon Rubinsohn, chief economist at the institution, said: “The latest survey captures an improvement in sentiment over the past month in the wake of the modest decline in mortgage rates. However, anecdotal remarks from respondents still demonstrate the need for realistic pricing to get deals done.”
Demand is slowing but is still outstripping supply, which letting agents fear is getting worse as landlords scale back their portfolios. “The exodus of landlords continues following the Labour election victory, with many concerned about proposals from the government,” Ben Waites, of Walker Singleton, in Halifax, said.
The survey data tallies with official figures from the Bank of England, which show that the number of new mortgages rose to 62,000 in July, the highest monthly number since September 2022 and up from 60,000 in June.
The Bank cut interest rates at the start of August from 5.25 per cent to 5 per cent and at least one more reduction is expected before the end of the year, helping to drive down mortgage lending rates after more than two years of monetary tightening.