RICS house price balance slumped to -34 in April, missing forecasts as mortgage rate expectations rise amid geopolitical tensions.
UK house prices fell at their fastest pace since November 2023 in April, with the RICS house price balance dropping to -34 from -25 in March. The decline, steeper than the Reuters poll forecast of -26, reflects rising mortgage rate expectations and geopolitical uncertainty linked to the Iran conflict.
New buyer enquiries and short-term price expectations remained negative, though slightly improved. Affordability pressures were most severe in London and southern England, with sentiment expected to stay weak until inflation and borrowing costs stabilize. RICS warned that Bank of England signals on potential rate hikes, driven by oil prices and supply chain disruptions, are exacerbating market challenges.
Markets are pricing in two to three quarter-point BoE rate increases by year-end, further weighing on mortgage rate expectations. Rents continued to climb sharply in April, though landlord instructions declined at a slower pace than in March.