According to a recent survey by the Royal Institution of Chartered Surveyors (RICS), house prices in the UK are continuing to decrease. The survey found that there is a decline in buyer demand and fewer homes coming onto the market. This, along with higher mortgage rates, is causing sales transactions and house prices to fall. The survey, which takes the temperature of RICS’ estate agent members, provides a snapshot of the current property market conditions.
The survey reveals that house prices nationwide are on a downward trajectory, with a September net balance of -69 percent, almost unchanged from the previous month. The net balance is a measure of the proportion of surveyors and estate agents reporting a rise in prices minus those reporting a fall. In areas such as the West Midlands and the South East of England, the downward pressure on house prices is particularly significant, with respective net balances of -94 percent and -91 percent.
One of the main factors contributing to these house price falls is declining buyer demand, which is likely due to higher mortgage rates. Tom Bill, head of UK residential research at Knight Frank, suggests that the housing market is becoming more predictable, allowing buyers and sellers to adjust to the higher mortgage rates. While house prices will continue to be under pressure, Bill believes that the majority of the correction will happen this year.
In terms of the rental market, the survey indicates that there is a disparity between the number of homes available to rent and the number of tenants in need of a home. This is causing rental prices to rise. The survey shows a net balance of +43 percent of respondents reporting an increase in tenant demand in September, while the net balance for landlords offering new rental properties was -24 percent. In light of this, surveyors and estate agents predict an average growth of around 5 percent in rental prices across the UK over the next twelve months.
Overall, the survey highlights the current downward trend in house prices and the challenges faced by both buyers and renters in the UK property market. The lack of buyer demand and a decline in new listings are contributing factors, while in the rental market, a shortage of available homes is pushing up rental prices. These trends are expected to continue in the coming months, with a slight improvement predicted next year.
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