UK housing market loses momentum as tax worries surface, RICS says

Zawya

2 days ago

LONDON: A recovery in Britain's housing market lost steam at the fastest pace in a year last month as some buyers worried about possible tax increases in finance minister Rachel Reeves' next budget, the Royal Institution of Chartered Surveyors said on Thursday.
Measures of buyer demand and agreed sales turned negative, the near-term sales outlook was flat and more surveyors reported house prices falling than rising, RICS said in a monthly report.
RICS Chief Economist Simon Rubinsohn said the outlook was clouded by uncertainty over the Bank of England's next moves on interest rates after the Monetary Policy Committee only narrowly voted to cut borrowing costs last week.
"Meanwhile, uncertainty about the potential contents of the chancellor's autumn budget is also raising some concerns," Rubinsohn said.
Reeves is widely expected to raise taxes for a second year in a row to get the government back on track to meet her fiscal rules when she delivers her annual tax and spending plan in October or November.
Britain's housing market has been volatile this year. The expiry in April of a tax break for the purchases of some homes caused a rush of demand before the deadline and a tailing-off after it, followed by a couple of stabler months.
"The somewhat flatter tone to the feedback to the July RICS Residential Survey highlights ongoing challenges facing the housing market," Rubinsohn said.
RICS' measure of new buyer enquiries turned negative having been positive in June for first time since December. Its balance of house prices fell back to -13% from -7%, the lowest since July 2024.
The report struck a more downbeat tone than those published by mortgage lenders Halifax and Nationwide both of which reported a rise in house prices in July.
In the rentals market, RICS' measure of landlords seeking tenants for their properties fell to its weakest since April 2020, which surveyors expected would lead to bigger rent increases.
Surveyors linked the fall to concerns among landlords over legislation that is expected to give more rights to tenants. (Writing by William Schomberg; editing by David Milliken)