Soft property market could block Bank of England interest rate rise
Buyer demand slipped again in March to mark a year of falls, surveyors reported in a gloomy snapshot of the market.
The amount of homes being put up for sale has also dropped, with average stock levels on estate agent books close to all-time lows, RICS said.
And new sales instructions have declined for the seventh consecutive month, with 20% more of surveyors reporting a fall than a rise.
House prices remain flat, with London and the South East the worst performers, while Northern Ireland, Wales and the East Midlands were the strongest.
There has been growing expectations the Bank of England will next month raise interest rates to 0.75%, after a number of hints from the Monetary Policy Committee (MPC).
However, the lacklustre property market could throw a hike off course.
Simon Rubinson, RICS chief economist, said: “The latest RICS results provide little encouragement that the drop in housing market activity is likely to be reversed anytime soon.
“Apart from the implications this has for the market itself, it also has the potential to impact the wider economy contributing to a softer trend in household spending.
“This could make Bank of England deliberations around a May hike in interest rates, which is pretty much odds-on at the moment, a little more finely balanced than would otherwise be the case.”
The outlook for the market is more positive, with more surveyors expecting an increase in sales than a further fall.
Brian Murphy, head of lending for the Mortgage Advice Bureau, said: “It’s interesting to note that 17% more of respondents believe we’ll see a pick up in sales activity in twelve months’ time, which will be after our scheduled departure date from Europe, which appears to reflect sentiment that a lot of would-be movers are holding on until after Brexit before making any major decisions.
“Whether or not at this point we’ll see demand, activity and values return to previous levels in the currently stalling London and South East markets, however, remains to be seen.”