Downturn in UK housing market bottoms out in October: RICS

BRITAIN saw some of the most widespread falls in house prices since 2009 last month, but the declines were at a slightly slower pace than in the previous two months and surveyors are less downbeat about the year ahead, a survey showed on Thursday.

The monthly report from the Royal Institution of Chartered Surveyors (RICS) resonates with house price data from mortgage lenders Halifax and Nationwide which showed month-on-month upturns in house prices in October after months of declines.

The RICS house price balance - which measures the difference between the percentage of surveyors reporting a rise in house prices over the past three months and those seeing a decline - rose to -63 in October.

The readings for September and August were revised up slightly to -67 but were the joint-lowest since March 2009, during the global financial crisis.

“Plenty of caution remains evident with respect to both buyer and seller activity across the UK housing market, albeit the latest survey feedback points to a slightly less negative picture than that reported over the previous few months,” RICS senior economist Tarrant Parsons said.

Halifax data released earlier this week showed British house prices have fallen by around 4 per cent since the middle of last year.

The Bank of England raised rates 14 times between December 2021 and August 2023 to a 15-year high of 5.25 per cent. Last week, the BoE said interest rates would need to stay high for an extended period to tame inflation, which at 6.7 per cent is the highest of any large, advanced economy.

“As such, mortgage affordability will remain stretched over the near term, leaving little prospect of a strong rebound in residential sales volumes, even if expectations have now moved away from cyclical lows”, Parsons said.

RICS said surveyors expected sales volumes to decline further over the coming three months, but to be broadly stable over the year to come.

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House prices are still around 18 per cent higher than before the start of the Covid-19 pandemic, when ultra-low interest rates and a greater demand for living space spurred demand in many rich economies.

Rents are expected to rise 4 per cent over the coming year, as fewer landlords advertise property. Tenant demand continues to rise, albeit at the slowest pace since the second quarter of 2021. REUTERS