UK Housing Market Remains Downbeat In February: RICS

(RTTNews) - The UK housing market activity continued the downbeat trend in February amid tighter lending conditions and stretched mortgage affordability, though there were signs of gradual improvement over the coming months, the Royal Institution of Chartered Surveyors reported Thursday.

The headline reading for new buyer enquiries advanced to -29 percent in February from -45 percent in January, the RICS survey found. Although the index signaled a decline in demand, this was the least negative value since July 2022.

Moreover, the new sales gauge was also less negative in February. The corresponding balance rose to -26 percent from -36 percent.

Yet, the average time taken to complete sales continued to increase, and it approached 19 weeks.

In February, the house price balance fell moderately to -48 percent in February from -46 percent in January.

Regarding the lettings market, the RICS survey showed relatively high rent expectations of +45 percent in February due to the ongoing imbalance in supply and demand.

"Given the ongoing weakness in demand, house prices remain on a downward trajectory, and are expected to see further falls through the first half of the year at least," RICS Senior Economist Tarrant Parsons said.

Parsons said near-term expectations suggest market activity will remain subdued over the coming months but the latest survey feedback shows tentative signs that the ongoing decline in buyer enquiries is now moderating.

Regarding the lettings market, RICS data showed relatively high rent expectations of +45 percent in February due to the ongoing imbalance in supply and demand.

The latest mortgage approvals data from the Bank of England suggested weakness in the housing market. Approvals for house purchases fell to 39,600 in January from 40,500 in December.

In addition, house price data from Nationwide Building Society earlier showed that house prices fell 1.1 percent on year in February, marking the first fall since June 2020 and the biggest decline since November 2012.

The Bank of England has raised its benchmark interest rate by 390 basis points since the current tightening cycle began in December 2021.