Estate agents have experienced a sustained period of buyer interest
(Picture: Alamy Stock Photo)It is only a straw in the wind — barely that — but has the chartered surveyors body RICS today delivered the first strong indicator of an approaching housing market slowdown?
Its June survey shows a fall in new buyer enquiries for the third month running and a majority of respondents also expect a fall in transactions in coming months.
Prices are still rising mainly due to a chronic shortage of stock and today’s Bank of England (BoE) credit conditions survey shows increasing demand for mortgages in the second quarter.
But if the fallout from yesterday’s higher than expected US inflation figure told us anything it is that interest rates will have to go up far faster than anyone was predicting just a few months ago.
The US markets are now close to pricing in a full percentage point rise from the Fed later this month while Bank of Canada has already begun with a 100 basis point rise of its own yesterday. The European Central Bank is behind the curve but will almost certainly have to play catch-up over the summer, if only to defend the battered euro against the rampaging dollar.
So where does that leave the Bank of England? It now seems hard to imagine the Monetary Policy Committee (MPC) can risk being out so far out of line with the rest of the world’s central banks — so a half-point rise on August 5 must now be all but nailed on.
Sooner or later that ever-increasing cost of money will start to weigh on the property market. We’re not there yet and it is far from crash territory but the turning point cannot be too far away.
