Prefer Jewish News on Google
UK housing market unlikely to ‘show much more life’, warns RICS chief economist
Simon Rubinsohn says mortgage costs and uncertainty continue to weigh on buyers as London flat prices fall almost 10%
Britain’s housing market is unlikely to “show much more life” in the near term as mortgage costs and continued political and geopolitical uncertainty weigh on buyers, according to one of the UK’s leading property economists.
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (RICS), made the comments following the publication of the organisation’s latest Economy and Property Market Update, which paints a sombre picture for the residential market.
Rubinsohn told Jewish News: “Activity in the housing market remains subdued, and while that is not unusual over the summer months, it is clear from the RICS seasonally adjusted data that the combination of geopolitics, the domestic political climate and the cost of mortgage finance are continuing to weigh on sentiment.
“This is particularly so in the case of flats where realistic pricing is essential for deals to be done.”
Rubinsohn said Land Registry data showed that London flats were selling for almost 10 per cent less than a year ago.
The wider RICS report found completed property sales between January and June were 3.8 per cent lower than during the same period last year, with measures tracking new buyer interest and newly agreed sales also pointing to subdued activity.
Affordability remains a significant constraint. The average two-year fixed mortgage rate has climbed by a full percentage point since falling below four per cent in February, according to the report.
Rubinsohn added that “this uncertain climate is being reflected in our forward-looking metrics which also remain downbeat and align with recent trading statements from housebuilders who are continuing to be much more cautious in the build out of development pipelines.”
The difficulties facing developers are also highlighted in the report. Construction output is currently around two per cent lower than a year ago, while 19,045 new private-sector homes were registered in the second quarter, five per cent fewer than a year earlier.
The pressure is particularly acute for housebuilders in London and the South East, where viability remains a concern. RICS cites Home Builders Federation analysis estimating that build costs have increased by around £76,000 per home over the past five years, taking into account materials, taxes, levies and regulatory compliance.
The picture across commercial property is more mixed. Investment volumes came in just below £10 billion in the second quarter, but 24 deals worth more than £100 million accounted for 62 per cent of the total, suggesting activity beneath the headline figure was considerably flatter.
London proved more resilient than other parts of the country. Investment enquiries were broadly unchanged in the capital, compared with declines across the rest of the South, Midlands and North, while occupier demand in London recorded a positive reading of 11 per cent.
There are also clear differences between sectors. Data centres remain the standout in terms of projected performance, while multifamily housing, aged care and life sciences are maintaining positive momentum. Prime London offices are another relative bright spot, with expectations for both rents and capital values revised upwards.
The rental market remains under pressure, meanwhile. RICS data points to a continued fall in properties coming onto the market from landlords, with the report suggesting the imbalance between supply and demand will keep rents moving upwards in the near term.
Looking ahead, Rubinsohn said an easing of geopolitical tensions could help improve conditions.
“A resolution of the Iran situation resulting in lower energy costs would help bring some confidence to the market by triggering some better value mortgage products. A period of stable government with a real focus on economic growth would also be helpful.”
He also pointed to speculation over the possible reintroduction of an equity loan scheme similar to Help to Buy, although said any such measure would likely focus on first-time buyers and new-build homes.
Many first-time buyers, he added, are finding it difficult to get onto the property ladder without assistance from the “bank of mum and dad”.
But despite the potential for measures to stimulate activity, Rubinsohn remains cautious about the immediate outlook.
“Putting this to one side, in the near term I am not confident the market is going to show much more life unfortunately.”
Keep community journalism free.
Jewish News is free for everyone. No paywall. No barriers. Just trusted journalism for anyone who wants to stay connected to Jewish life in Britain.
If you value that, please support us.
From as little as £5 a month, you can help keep our journalism free and accessible to all.
Every day, we report on the issues that matter to our community. We celebrate achievements, support charities, challenge antisemitism and ensure Jewish voices are heard more widely.
From as little as £5 a month, you can help us continue to:
- Report on the stories shaping Jewish life in the UK and beyond
- Bring our community together through shared stories, events and campaigns
- Celebrate the people, culture and moments that define our community
- Support organisations doing vital work across Jewish Britain
You can make a one-off donation or become a regular supporter. Every contribution helps keep our journalism free, independent and accessible to all.
If everyone who values Jewish News gave a small amount, it would make a real difference to our future.
