New buyer enquiries stabilised in spite of the May interest rate rise, indicating that conditions are still good, according to the Royal Institute of Chartered Surveyors (RICS). This seems to imply that the effect rises have had on new buyer enquiries is limited, with the absolute level of demand still high in light of buoyant economic conditions.
New instructions to sell property increased at the fastest pace in the survey’s history, says the report, possibly due to the expected (now delayed) introduction of HIPs: 39% more surveyors reported a rise in new instructions up from 12% in April.
RICS spokesman Jeremy Leaf said: ‘The stabilisation in buyer enquiries sends a clear signal that home buyers are undeterred by recent interest rate rises. However, the full impact of rising rates is yet to be felt and buyers tempted by the recent strength of house price rises may need to exercise caution. With interest rates expected to rise even higher and some home owners fearing the end of fixed rate deals, affordability conditions are set to worsen across the board and will herald a cooling market.
‘Conditions in the market have loosened as sellers sought to avoid the upfront costs of the recently delayed HIP. However, the surge in supply will be short lived, although owners of four bedroom properties may decide to enter the market before the next deadline on August 1,’ he concluded.