House Prices Plummet at Record Rate since 2009, while Rent Soars due to Supply-Demand Imbalance
Updated: 00:57 BST, 14 September 2023
Recent findings from a survey conducted by the Royal Institution of Chartered Surveyors (RICS) reveal that house prices in the UK have experienced their sharpest decline since 2009, continuing the downward trend. Both estate agents and surveyors were included in the poll, which showed a particularly negative reading for August. The demand from buyers and the number of agreed sales saw a significant drop. On the other hand, the rental sector witnessed a surge in rent prices due to a considerable gap between demand and supply.
RICS reported that -68% of the surveyed professionals saw a decline in house prices in their respective regions, a further decrease from -55% in July. The net balance determines the disparity between the percentage of surveyors observing price increases and decreases. The West Midlands, East Midlands, East Anglia, and the South East experienced the largest decreases in property values. Northern Ireland was the only region where more surveyors reported rising prices than falling ones.
According to Halifax figures released last week, the average value of a home in the UK is £279,569, depicting a £14,000 decline within a year. RICS anticipates continued price drops in the short term, largely attributed to higher mortgage rates. The organization also mentions that a swift recovery in the housing market does not seem likely at the moment.
The demand from prospective homebuyers remained stagnant, with a net balance of -47% of surveyors reporting a decline in inquiries throughout the month. This is the lowest reading since the onset of the pandemic. All regions of the UK experienced a decline in demand from new buyers.
Meanwhile, the rental market is witnessing a surge in demand across the country as tenants vie for limited properties, while landlords are exiting the sector. RICS reports a net balance of 60% of surveyors foreseeing higher rental prices in the next three months. RICS Chief Economist Simon Rubinsohn highlights that the feedback from RICS members indicates a sluggish housing market with no relief in sight. Alec Harragin, Director of Savills head office in London, adds that although inflation appears to be declining and mortgage rates may have peaked, the issue of affordability will continue to persist.
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