UK Housing Market Plunges: Agents Fear Deeper Gloom

UK estate agents' sentiment reached its lowest point in over two years last month, primarily due to escalating mortgage rates. The Royal Institution of Chartered Surveyors (Rics) revealed that its house price index fell to minus 34 in April, the most significant decline since November 2023. This downturn reflects a broader malaise, with indicators for new buyer enquiries and agreed sales remaining firmly negative.

The current housing market faces significant macro headwinds, compounded by increased oil prices and disrupted supply chains. These factors are driving renewed inflation concerns, prompting warnings from the Bank of England about potential interest rate hikes. Consequently, average mortgage rates have risen; for example, a two-year fixed rate at 60% loan-to-value increased to 5% in April.

This cautious atmosphere has led many potential buyers to postpone their decisions, waiting for greater clarity on inflation and mortgage rate movements. While some recent mortgage approvals saw a temporary uptick, likely due to borrowers securing deals before lenders altered them, the overall outlook remains subdued. Rics forecasts a continued weakening of the property market, with expectations for house prices over the next three months remaining negative.