UK property market set to get a boost from interest rate cuts – estate agents

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Data released on Thursday showed the UK property market is picking up steam following the general election and the Bank of England's first interest rate cut in four years, but the jobs market has yet to recover.

The Chartered Institute of Property Surveyors said its monthly survey of estate agents showed a significant increase in sales in July, with more respondents expecting sales and prices to rise in the short term and next year than in June.

But a separate poll of recruiters found no such post-election rebound. The poll found fewer people were hired in July, both full-time and part-time, that vacancies were still shrinking and that more applicants were looking for work after being laid off.

Ricks said while housing market activity has been relatively subdued recently, confidence that sales will increase over the next three months is stronger than at any time since 2020.

The agency's expected net balance of sales (the difference between the percentages at which real estate brokerages expect their sales to rise and fall) increased from 22% in June to 30% in July.

Simon Rubinson, chief economist at RICS, said the mood appeared to have changed with the new government's focus on stimulating housing development and its recent cut of the benchmark interest rate by a quarter of a percentage point.

But he added that there would be significant challenges to implementing the intended reforms, and it was unclear whether the BoE would follow through on its August rate cut to 5%, and whether further cuts would be made in the short term.

The cautious optimism about the RICS survey comes after lender Halifax said on Wednesday that house prices rose 0.8 per cent in July after being relatively flat for the previous three months.

The annual price growth rate in Halifax hit 2.3 per cent, the strongest since January, beating analysts' expectations of a 0.3 per cent increase.

Amanda Bryden, Halifax's head of mortgages, said the recent cuts in mortgage rates following the BoE's rate cut were encouraging, but potential homeowners would still face challenges due to affordability constraints and a lack of inventory.

Barclays, HSBC and NatWest this week announced discounts on some of their leading fixed-rate mortgage products, raising hopes that competition will drive down borrowing costs.

The competition for market share among the big lenders is good news for borrowers, said Hina Budia, a partner at brokerage Knight Frank Finance.

But the more upbeat mood in the home sales market contrasted with a gloomy report from letting agents, who said landlords were still pulling out of the market and the flow of listings entering the rental market was deteriorating.

Tenant demand was still growing, but had eased compared to June, meaning rents are likely to continue to rise, but landlords’ expectations are at their lowest since early 2021.

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Meanwhile, recruiters in every region except London were looking for fewer permanent job openings than last month, according to a monthly report by the Recruitment and Employment Federation, a trade body that has been closely watching the UK's Department for Employment's glitchy jobs data, and advisory firm KPMG.

Recruiters also reported a continued decline in demand for permanent staff, with vacancies falling more sharply in the public sector, IT and computing, and executive and professional roles. Meanwhile, more candidates are stepping up for roles after being laid off.

John Holt, chief executive and senior partner at KPMG UK, said the figures were compiled before the BoE cut rates, but employers' willingness to hire had not yet recovered despite the stability of the new government and easing inflation pressures.

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