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UK House Price Indicator Hits Highest in Over Two Years - BLOOMBERG
(Bloomberg) -- A closely watched gauge of UK house prices hit its highest in over two years in November as buyers were buoyed by a Bank of England interest-rate cut and an end to uncertainty over Labour’s first budget.
The Royal Institution of Chartered Surveyors said its price indicator jumped to 25 from 16 in October, with gains across almost every region. It was the highest since September 2022, just before Liz Truss’ chaotic mini-budget upended the mortgage market. Economists had expected a more modest gain to 19.
The index measures the breadth rather than the depth of price increases by calculating the difference between surveyors reporting a rise in home values over the past three months compared to those that saw a fall.
It showed the housing market gathering momentum after households were spared much of the pain on taxes in Chancellor Rachel Reeves’ budget and got a psychological boost from the BOE’s second rate cut this year.
The quarter-point reduction to 4.75% brought immediate relief to those on adjustable-rate mortgages that move in line with the BOE benchmark. However, fixed rates have been edging higher amid signs the central bank is in no hurry to ease again following an inflationary budget. Experts warned that could sap momentum going forward.
“The broader macro environment is likely to pose additional headwinds moving forward,” said Tarrant Parsons, senior economist at RICS. “Most significantly, the recent rise in mortgage interest rates may curtail the recovery in market activity before long.”
The average two-year fixed mortgage rate has crept up to 5.48%, up from around 5.39% before the budget on Oct. 30, according to Moneyfacts.
RICS said that new buyer inquiries pointed to a slight pickup in demand, while its sales gauge eased.
It came as online property portal Rightmove predicted an uptick in sales and a 4% rise in sellers’ asking prices in 2025. It was its most upbeat prediction since 2021, though it was in line with long-term average price growth.
The first quarter is likely to be “particularly busy,” as first-time buyers, home-movers and investors all try to complete planned purchases before stamp duty charges go up in April, said Tim Bannister, a director at Rightmove.
