Estate agents are predicting the first house price rises in two years against the background of falling interest rates.
The positive outlook comes from estate agent members of the Royal Institution of Chartered Surveyors (RICS) who report growing confidence now that uncertainties around the general election have passed.
RICS said its measure of residential sales expectations over the next three months accelerated to the highest level since the start of 2022.
As a result, its members anticipate prices will pick up in the near-term for the first time in two years.
The RICS said: “Looking at price expectations over the next 12 months, a net balance of +54 of respondents believe prices will continue to rise.”
High interest rates and mortgage costs coupled with the cost of living squeeze, fuelled by high energy and food bills, have cast a cloud over the property market since 2022.
The RICS figures suggest the market is about to turn a corner as the economy improves.
The Monetary Policy Committee (MPC) of the Bank of England is expected to cut the base rate from the current 16-year high of 5.25 percent in August with further reductions later this year.
Against that background, a number of high street banks have been cutting mortgage rates and increasing the maximum size of loans available.
Tarrant Parsons, senior economist at RICS, said: “Although activity across the housing market remained subdued last month, forward-looking aspects did improve slightly.
“If the Bank of England does decide that the current inflation backdrop is benign enough to start loosening monetary policy next month, this may prompt a further softening in lending rates.
“In addition, the recent election delivered a clear outcome, with housing pushed up the political agenda.”
Labour has promised to build 1.5 million homes over the next five years, a target not met since the 1960s. It is also planning mortgage guarantees for first-time buyers.
However, there are serious concerns whether Britain has the construction workers needed to deliver on these promises.
Former RICS chairman, Jeremy Leaf, said: “The election had limited impact on our buyers and sellers, not just because the outcome had been largely factored in but the pace and level of mortgage rate reductions was much more relevant.
“Over the past month and particularly since the result, we have seen a rebound in confidence and activity.
“However, we are not getting carried away as the increased choice and continuing economic concerns will keep the higher price aspirations of homeowners in check.”
Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “A new government has breathed a new air of optimism into the property market.
“Agents are hoping this means sales will pick up, and falling house prices will reverse in the year to come. It’s the most positive agents have been about sales since the start of 2022, and they’re walking to viewings with a new spring in their step. However, it remains to be seen whether buyers will share their view.
“Agents are holding out hope for an upswing in consumer sentiment, buoyed by the optimism that a change at the top can engender, and hope that life in general will change for the better.
“We will have to see whether this materialises and encourages more enthusiastic buyers into the market in the weeks to come.
“In the interim, if you’re looking to buy right now, this remains a buyers’ market, so there should be some bargains to be had.
“If the agents are right, you may need to take advantage of a relatively small window of opportunity. If optimism catches on, you’ll be competing with more buyers and hopeful sellers will hold firm on prices.”
