House prices rise for the first time in two years after rate cut

House prices have shown signs of recovery for the first time in nearly two years, as reported by the Royal Institution of Chartered Surveyors (RICS). In August, a key metric measuring price growth shifted positively, with a net balance of one percent of professionals reporting price increases, a significant improvement from a low of -67 percent in August 2023. This change coincided with a reduction in the Bank of England's base rate from 5.25 percent to five percent, which has encouraged lenders to lower mortgage rates and increased buyer interest in the housing market. The RICS survey also indicated a rise in demand for homes, likely influenced by the recent base rate cut, alongside a slight uptick in the availability of properties for sale. However, the rental market remains challenging, with demand from tenants continuing to outpace the sluggish supply of rental properties. The survey revealed a decrease in new landlords engaging estate agents, which is expected to exacerbate the existing imbalance in the rental market and drive rental prices higher. Simon Rubinsohn, the chief economist at RICS, noted an improvement in market sentiment, attributing it to modest declines in mortgage rates and increased buyer interest. Nevertheless, he cautioned that affordability issues persist in the sales market, and the lettings market faces even greater challenges due to diminishing rental stock. The uncertainty surrounding future interest rate cuts and upcoming budgetary decisions also contributes to a cautious outlook. Additionally, a separate survey by KPMG found that nearly half of potential homebuyers are interested in low-carbon homes, motivated by reduced energy bills and environmental concerns. However, a significant portion of the UK population lacks knowledge about eco-friendly options, highlighting a gap in awareness that could impact future housing choices.