Brokers report a decline in UK home prices ending more than two years of consecutive growth, according to RICS
- UK estate agents saw house prices fall for the first time in 28 months
- RICS survey suggests price growth is ‘stalling’
- Rents are expected to grow by 4% in the coming year due to mismatch between supply and demand
- Buyer inquiries fell again in October, compared to September
According to the latest RICS survey, real estate agents reported a decline in home prices across the country in October, ending a 28-month run of rising home prices.
In September, the survey, which includes the opinion of RICS member brokers in the UK, revealed a net positive rating of 30 percent when asked about house prices, while in October it felt sharp to minus 2 percent.
RICS calculates net ratings by taking the number of agents reporting a price drop from those reporting an increase. For example, if 30 percent reports an increase and 5 percent reports a decrease, the net balance would be 25 percent.
Fall: RICS brokers reported seeing house prices fall in October
However, the global figure masks regional price differences. Respondents to the survey in areas such as East Anglia and the South East of England were more likely to see price falls, with net balances of -31 percent and -16 percent, respectively.
Conversely, respondents from Northern Ireland and Scotland continued to report an upward trend in house prices, even though the growth rate was slower than earlier in the year.
Looking ahead, on balance, respondents in all parts of the UK now believe that prices will fall somewhat over the coming year.
The October rating suggests that “house price growth is coming to a halt,” commented in the survey.
At the same time, buyer inquiries fell to minus 55 percent for the sixth straight month, even beyond the negative 36 percent in September.
In addition, the number of investigations fell for the second month in a row in all regions of the UK.
Home prices fell across the country in October according to RICS brokers
Buyer demand has fallen in the UK, according to RICS, the second month they have fallen
Simon Rubinsohn, chief economist at RICS, commented: “The latest feedback on the RICS survey provides further evidence of caution among buyers in light of the sharp rise in mortgage costs.
As a result, activity volume is likely to decline in the coming months and realistic pricing is now much more important to complete a sale.
The calm in the financial markets could offer some relief, although it may be premature to assume that this will be reflected in a reduction in lending rates in the near term. However, the employment picture remains critical for the medium-term outlook and remains solid for the time being.’
Broker Savills has predicted that prices will fall by 10 percent next year and rise by 1 percent in 2024. In May, the broker only forecast a 1 percent decline in 2023, but the sharp rise in mortgage rates has led to a bleaker outlook.
Simon Wall of Stephanie Macnab Estate Agents, said: ‘The steam has definitely left the market here, although activity remains at what would otherwise be considered reasonable levels.
“There is greater buyer strength with tougher initial negotiations and renegotiations after investigation. Hopefully the easing of the economic outlook will improve things.
“At the same time, the number of new offers entering the market also continues to decline, with a net balance of -17 percent of respondents nationally citing a decline.”
Marion Currie of the Galbraith Group in Dumfries and Galloway, Scotland, said that while there is still a lot of interest in available housing, interest in winter is waning.
“The pool of buyers who have missed out on other properties in the past two years is still there, but decreasing,” she added.
In the rental market, rents are expected to continue to rise as tenant demand continues to grow at a brisk pace, with a net balance of 46 percent of survey participants noting an increase in October.
At the same time, however, landlords’ instructions fell again according to a net balance of -14 percent of respondents.
In a year from now, the respondents expect rents to have risen by about 4 percent nationwide
What to do if you need a mortgage?
Borrowers who need to find a mortgage because their current fixed-rate deal is expiring, or because they have agreed to a home purchase, have been urged to act, but not to panic.
Banks and mortgage banks are still lending and mortgages are still being offered and applications are being accepted.
However, rates change quickly and there is no guarantee that deals will last and not be replaced by higher rate mortgages.
This is Money’s best mortgage interest calculator powered by L&C that can show you deals that match your mortgage and property value
What if I have to transfer?
Borrowers should compare rates and speak to a mortgage broker and be willing to trade to get a rate.
Anyone with a fixed-rate deal that expires in the next six to nine months should research how much it would cost to re-mortgage now — and consider taking on a new deal.
With most mortgage agreements, costs can be added to the loan and they are not charged until it is closed. By doing this, borrowers can secure a rate without paying expensive arrangement fees.
What if I buy a house?
Those with an agreed home purchase should also aim to secure rates as soon as possible so that they know exactly what their monthly payments will be.
Home buyers need to be careful not to overburden themselves and be prepared for the possibility that house prices could fall from their current high levels as higher mortgage rates limit people’s borrowing capacity.
Compare mortgage costs?
The best way to compare mortgage costs and find the right deal for you is to talk to a good real estate agent.
You can use our best mortgage interest calculator to display deals that fit your home value, mortgage size, term and fixed interest needs.
However, keep in mind that rates can change quickly, so the advice is that if you need a mortgage to compare rates and then talk to a broker as soon as possible, they can help you find the right mortgage for you .
> Check out the best fixed rate mortgages you can apply for