Goldman Sachs urges investors to stop betting against UK property stocks as the market shows signs of recovery.

Economists at the Wall Street bank are predicting a rebound in the real estate market.

It had initially told its investors to bet against the market as commercial property values plummeted in the face of high interest rates.

This combined with high mortgage costs and the sector’s growing debt load made the sector seem increasingly unattractive.  

However in a sign of positivity for the market, the bank has urged investors to stop shorting on property stocks.

Sharon Bell of Goldman Sachs said: “The real estate market is holding up: housing prices edged up last month amid encouraging signs that mortgage rates are starting to come down.”

It also told investors that it expects interest rates to fall to 3pc in mid-2025.

Economists at Goldman Sachs predict the Bank of England will cut its main interest rate in August by 25 basis points and then again for several consecutive quarters as inflation cools.

Ms Bell added: “UK consumer confidence also rose sharply, outperforming expectations and raising hopes of higher spending on the festive season.”

Meanwhile, 10-year gilt yields are down from 78 basis points, from 4.75pc to below 4pc.

Data from Rightmove showed that vendors were still slashing asking prices in December, indicating that the market has yet to see any material recovery.

The average selling price of houses fell by 1.9pc in December to £355,177.