House prices continue to fall, according to a survey carried out among real estate agents and appraisers.
The latest survey by the Royal Institution of Chartered Surveyors (Rics) suggested that home buying activity continued to be affected by the rise in mortgage rates in October.
The monthly survey takes the temperature of Rics’ appraiser and valuer members and offers a snapshot of what’s happening in the property market right now.
Recession: Latest Rics survey said home buyers feeling ‘off’
According to the survey, housing prices are on a downward trajectory nationwide.
While October’s net balance of -63 percent is a slight improvement over September and August, it is still extremely dismal compared to historical standards.
This contrasts with more positive house price forecasts from Savills and Halifax this week.
The net balance refers to the proportion of surveyors and estate agents reporting a rise in prices, minus those reporting a fall, and can range from -100 to +100.
For example, if 73 percent say prices have fallen and 10 percent say prices have increased, this would result in a net balance of -63 percent.
In this scenario, it would also mean that an additional 17 percent of respondents would have stated that prices remained unchanged.
Falling: House prices continue on a downward trajectory, according to the Rics survey
Rics members’ expectations for house prices point to further declines in the next three to 12 months.
Price sentiment for next year was most negative in the East Midlands, West Midlands and Yorkshire & the Humber, with each region reporting net balances below -60 per cent.
James Watts, of Bradford-based agent Robert Watts Estate Agents, said: ‘It is clear that higher value homes are struggling and sales have fallen significantly.
There is interest on the part of buyers, but no aggression when making offers. Sellers have to adjust their horizons
Tom Wilson, an estate agent in Lincolnshire
‘However, we believe that upsizing buyers now have more bargaining power and can get a better deal than in the last two years.
Tom Wilson, a member of Rics based in Stamford, Lincolnshire, added: ‘There is interest from buyers but no aggression in making offers. Sellers [are] having to adjust your horizons to adapt.’
By contrast, Rics members based in Scotland and Northern Ireland are anticipating rising house prices over the next twelve months.
“Another month of a resilient property market for sales in Glasgow,” says Glasgow-based Rics member Grant Robertson.
“While there is evidence that values are falling in the UK, Glasgow and the west of Scotland continue to see nothing more than a weakening of the upward pressure on values.”
Gloomy: Price sentiment is most negative in the East Midlands, West Midlands and Yorkshire and the Humber.
Undecided buyers: Virtually all parts of the UK continue to see negative buyer demand, except for the North West of England and Northern Ireland.
Buyer demand remains weak
A major factor contributing to these home price declines is declining buyer demand, which will likely be reduced by higher mortgage rates.
Most agents reported fewer buyer inquiries during October, marking eighteen consecutive months in which this has been in negative territory.
However, its latest reading is the least negative poll result since May.
Virtually all parts of the UK continue to see negative demand, except for the northwest of England and Northern Ireland.
“It’s gone from being a seller’s market to a buyer’s market,” says Trevor Brown, a member of Southend-on-Sea-based Rics. ‘There are more properties available and less willing buyers.
‘Sellers have to be realistic and willing to accept a lower offer to make a sale.
“Auctions are full of rented apartments, as owners flee the market due to high interest rates and high taxes.”
Shortage of new listings
According to the Rics survey, the flow of new instructions reaching the sales market continues to slow down.
Additionally, Rics partners continue to report that the number of market appraisals (when agents come to value homes) this month was lower than the equivalent period last year.
This suggests that the supply of homes coming to market will not improve in the immediate future.
Huddersfield Rics member Alex Mcneil added: “There has been a further slowdown in new instructions, however some established investors are starting to sell.”
“It will be a difficult winter and the arrival of the New Year is scarce.”
Sales volumes continue to struggle
The number of agreed sales remained weak in October, with the latest net balance at -25 percent.
This was less negative than the -45 percent and -35 percent figures recorded in August and September, respectively.
In recent months, several real estate agents and home builders have announced staff cuts amid the crisis.
Estate agents such as The Modern House, Strike and Knight Frank, along with housebuilders Bellway, Vestry and Persimmon, have announced they will cut their workforce in recent months.
The Rics survey suggests that there is unlikely to be a significant change in the sales outlook for the remainder of 2023.
Struggling: On average, each real estate agency branch is making fewer than 15 sales in the last three months, according to the Rics survey.
For the next 12 months, the sales expectations series recorded a net balance of zero.
This suggests a generally stable outlook for the sales market over the next year.
Putney-based Rics member Alex Howard Baker said: “We have some very good buyers who are still willing to press ahead. But sellers perceive the market to be terrible and generally choose not to approach it.
“It’s a stalemate and buyers expect further price declines unless wage growth comes to the rescue to mitigate higher mortgage costs.” [which is] unlikely.’
Rics member David Paris from Upminster added: ‘The market is hampered by a lack of new guidance.
‘There is good demand for homes priced over £1 million, but properties under £800,000 are difficult to sell. Apartment prices have dropped due to lack of demand from first-time buyers.
Some links in this article may be affiliate links. If you click on them, we may earn a small commission. That helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.