UK house sales should rise over the next three months on hopes that mortgage rates will soon start to fall, a survey has found.
According to the Royal Institution of Surveyors (RICS), 20% of professionals expect home sales to recover over the next three months, the highest level of sales forecast since January 2022.
Economists predict the base rate could be cut to 5% from a 16-year high of 5.25% when the next vote is held on August 1. In response, Britain's major banks have cut mortgage rates in recent days, offering some relief to homeowners and would-be buyers.
The newly elected Labour government has signalled its determination to boost the housing market, aiming to deliver 1.5 million homes over the next five years – the first such achievement since the 1960s.
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The remaining 54% of experts surveyed expect house prices to rise a year from now, and Rix said this highlights a key challenge for the new government as increasing housing supply is “no easy task”.
Tarrant Parsons, senior economist at Rics, said: “While overall housing market activity remained subdued last month, forward-looking aspects improved slightly.”
“Several factors have emerged that could support a recovery over the coming months.
“If the Bank of England judges that current inflation conditions are benign enough to ease monetary policy from next month, it could prompt a further easing of lending rates.”
“Furthermore, recent elections have pushed housing issues higher up the political agenda with clear results.”
When it comes to the rental market, demand continues to outstrip supply, despite rents skyrocketing in many parts of the country.
In June, 28% of experts saw an increase in tenant demand, while a net balance of 11% indicated a decline in new instructions from landlords and a resurgence in the number of new rental listings.
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Looking ahead, 38% of experts expect rental prices to increase over the next three months.
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“The month before the election saw more bad news that the market has become accustomed to, with falling sales and prices and fewer buyers,” said Sarah Coles, Yahoo Finance UK columnist and head of personal finance at Hargreaves Lansdown.
“The situation is so dire that even the number of new sellers has fallen. Stubbornly high mortgage rates have also made the situation worse, with the average two-year fixed rate remaining at just below 6% for most of the month, according to figures from MoneyFacts.
“With the election results and a new government in place, there may be more hope in July.”
She added: “Real estate agents are hopeful that consumer sentiment will pick up, buoyed by the optimistic outlook brought about by the change at the top, and that life in general will change for the better.”
“We'll have to wait and see if this materializes and sees more eager buyers enter the market in the coming weeks.”
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