UK home buyer sentiment weakened in February as geopolitical tensions linked to the Middle East conflict and rising energy prices dampened confidence, according to a survey by the Royal Institution of Chartered Surveyors. The survey showed a sharp fall in buyer enquiries as concerns about higher mortgage rates weighed on housing demand.
Key highlights
- UK home buyer enquiries fall sharply in February, RICS survey shows
- New buyer enquiries drop to -26 from -15 in January
- Concerns grow over energy prices and mortgage rate outlook
- House price expectations weaken further
- Tenant demand remains stable in the rental market
Buyer demand
Britain’s housing market showed signs of slowing as demand from potential buyers weakened.
The Royal Institution of Chartered Surveyors (RICS) said its measure of new buyer enquiries dropped to a net balance of -26 in February, down from -15 in January, marking the lowest reading since December.
The survey covered the period between February 23 and March 9, which included the early days of the conflict between the United States, Israel and Iran that began on February 28.
Market impact
Rising geopolitical tensions and higher energy prices are adding pressure to the UK housing market.
Higher oil and energy costs could keep mortgage rates elevated, potentially reducing affordability for buyers and slowing housing market activity.
The latest survey suggests confidence among prospective buyers has weakened as uncertainty surrounding the global economic outlook increases.
Tarrant Parsons, head of market research and analytics at RICS, reportedly said the geopolitical situation has affected housing market sentiment.
“The deterioration in the geopolitical backdrop has clearly weighed on confidence,” Parsons said.
“The recent rise in oil and energy prices has also increased the likelihood that mortgage rates will remain higher for longer.”
Housing outlook
The survey indicated weaker near-term expectations across several housing indicators.
Near-term sales expectations slipped to a net balance of -2, the lowest level since November.
The house price balance declined to -12 in February, compared with -10 in January, and below economists’ expectations of -9 in a Reuters poll.
Short-term house price expectations also weakened, dropping to -18 from -6 previously.
Rental market
While buyer demand softened, the rental market remained relatively stable.
Tenant demand held steady during the three months to February, according to the survey.
However, new landlord instructions remained deeply negative, suggesting limited supply of rental properties entering the market.
Outlook
Analysts say the UK housing market will likely remain sensitive to developments in global energy prices and interest rate expectations.
If energy costs continue to rise and mortgage rates stay elevated, buyer demand and house price growth could remain under pressure in the months ahead.
FAQs
Q1: What did the RICS survey show about UK housing demand?
The survey showed new buyer enquiries falling to -26 in February, indicating weaker demand.
Q2: Why is housing sentiment weakening?
Concerns about the Middle East conflict, rising energy prices and the possibility of higher mortgage rates are weighing on buyer confidence.
Q3: What happened to house price expectations?
Near-term house price expectations fell sharply to -18, reflecting growing caution in the housing market.
Q4: How is the rental market performing?
Tenant demand remained stable, though new landlord instructions continued to decline.
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