LONDON: The housing market in United Kingdom faces “significant” tests from higher borrowing costs and fears of tax rises in next month’s budget, agents warn.
The Royal Institution of Chartered Surveyors (RICS) said its index of house prices improved slightly to minus 28 in August, up from minus 29 the previous month.
The indicator has remained below zero – meaning more agents report price falls than rises, since April 2025.
Agents expect further declines over the next three months, with a particularly weak outlook in London.
Britain’s property market has been relatively resilient despite a surge in mortgage rates due to the war in Iran.
RICS’ gauges of buyer demand and sales volumes improved in August, suggesting the market is “gradually finding its footing”, said Tarrant Parsons, the institution’s head of market research.
But he suggested that stability could now be at risk. “The Bank of England’s increasingly hawkish tone, on the back of renewed volatility in global energy markets, is a reminder that the borrowing cost outlook could yet deteriorate further.”
Speculation that Chancellor of the Exchequer John Healey will increase property taxes is “source of caution for both buyers and sellers”, he said. — Bloomberg