LONDON – Already rapid house price growth in Britain hit a new six-month high in January but momentum in the housing market could soon fade because of a growing cost-of-living squeeze, a closely-watched survey showed on Thursday.
The Royal Institution of Chartered Surveyors (RICS) said a net balance of +74% of its members reported a rise in house prices in January, up from +70% in December and its highest since July. A Reuters poll of economists had pointed to a reading of +68%.
The report echoed other surveys that show Britain’s housing market retained much of its momentum going into 2022, despite the phasing out of temporary tax breaks on property purchases in the second half of 2021.
But with household budgets being squeezed by high inflation and imminent tax rises, RICS cast doubt on whether the housing market can keep up its recent strength.
“There is an inevitable question mark over the impact of rising interest rates allied to the jump in the cost of living on homebuyer sentiment,” RICS chief economist Simon Rubinsohn said, referring to the Bank of England’s decision last week to raise borrowing costs for the second time in two months.
Earlier this week mortgage provider Halifax warned that house price growth – running at 10% year-on-year according to the latest official data – was likely to slow considerably, despite a limited number of houses coming to the market.
Rubinsohn said it was “a little worrisome” that RICS’ gauges of house prices and rents for the next 12 months had both approached series highs, suggesting a peak was near.
(Reporting by Andy Bruce)
