Eurozone falls into recession, hit by high energy prices and interest rate hikes – business live

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Storm clouds are gathering over the UK property market, according to the country’s surveyors.

The Royal Institution of Chartered Surveyors (RICS) is warning this morning that expectations of further interest rate rises from the Bank of England may put renewed downward pressure on the market in the months ahead.

RICS’s monthly healthcheck on the property sector has found some improvement in market conditions during May, with the first rise in new instructions since early 2022. House prices continue to fall in much of England, although Scotland and Northern Ireland have witnessed an uplift.

RICS Senior Economist, Tarrant Parsons, says there was a modest recovery in the sales market activity during May, with generally less negativity compared to the end of 2022.

But he warns that expectations of further interest rate hikes will hit demand and affordability.

“However, it seems storm clouds are gathered, with the UK’s stubbornly high inflation likely undermining the recent improvement in activity by prompting the Bank of England to take further action through interest rate rises, leading to higher mortgage rates and ultimately reducing affordability and buyer demand.

The banking sector appears to expect this with many banks and building societies already introducing products with higher interest rates.

Yesterday morning, Halifax reported that house prices experienced their first annual fall in more than a decade last month.

Related: UK house prices experience annual fall for first time in decade, data shows

The Bank of England has already raised interest rates 12 times in a row, and the City currently expects another rise this month, from 4.5% to 4.75%. They could hit 5.5% by the end of the year, the money markets indicate.

Interest rate rises are also impacting the rental sector, encouraging landlords to leave the sector and sell up property, Parsons adds.

Also coming up today

The UK’s financial regulator has unveiled a major shake-up of the rules around marketing of cryptoassets.

The crackdown from the Financial Conduct Authority will include banning the so-called “refer a friend” bonuses that are popular in the industry. Promoters must also ensure adverts are clear, fair and not misleading, and ensure people have the appropriate knowledge and experience to invest in crypto.

Sheldon Mills, executive director at Consumers and Competition, said:

“It is up to people to decide whether they buy crypto. But research shows many regret making a hasty decision. Our rules give people the time and the right risk warnings to make an informed choice.

“Consumers should still be aware that crypto remains largely unregulated and high risk. Those who invest should be prepared to lose all their money.

“The crypto industry needs to prepare now for this significant change. We are working on additional guidance to help them meet our expectations.”

Related: Crypto ads will need to carry risk warnings under new UK rules

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