The Royal Institution of Chartered Surveyors’ (RICS) measure of new buyer enquiries rose to a net balance of -18, the least negative figure since -14 in May 2022 and up from -34 in April.
A gauge of agreed sales rose to -7 in May, up from April’s -18.
RICS’ house price balance, which measures the difference between the percentage of surveyors seeing rises and falls in house prices, increased to -30 last month from -39 in April. A Reuters poll of analysts had pointed to a reading of -38.
However, analysts are forecasting another slowdown for the housing market with markets largely expecting the BoE’s Bank Rate to peak at 5.5% later this year, up from 4.5% now.
“It seems storm clouds are gathered, with the UK’s stubbornly high inflation likely undermining the recent improvement in activity,” Tarrant Parsons, senior economist at RICS, said.
Britain’s housing market staged a recovery earlier this year after former prime minister Liz Truss’s “mini-budget” caused turmoil in financial markets in September and sent the cost of fixed mortgage rates sharply higher to above 6%.
But there have been signs of a fresh loss of momentum in the market recently.
Britain’s biggest mortgage lender, Halifax, on Wednesday (7 June) said house prices dropped by 1.0% year-on-year in May, the first annual decline since 2012. Rival Nationwide last week reported a 3.4% annual fall in prices, the largest since 2009.
The BoE, which has raised borrowing costs 12 times in a row since late 2021, is expected to increase Bank Rate again to 4.75% on June 22 in an effort to bring inflation – which was a higher-than-expected 8.7% in April – back to its 2% target.
Some mortgage lenders, including Halifax and Nationwide Building Society have ramped up their fixed mortgage rates in response to the rise in borrowing costs in financial markets.
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