UK estate agents turn pessimistic seeing drop in house prices

UK estate agents turned pessimistic about the housing market, anticipating prices will decline over the next year for the first time since the start of the coronavirus pandemic.

The Royal Institution of Chartered Surveyors (RICS) said its measure of price expectations for the next year fell to minus 18 per cent in September from 3 per cent the month before. Inquiries by potential homebuyers fell for a fifth month, and some sellers were reluctant to bring properties to market.

The figures reflect a surge in interest rates and turmoil in mortgage markets stemming from the Bank of England’s measures to raise borrowing costs and quell inflation. While a lack of supply of properties on the market kept prices buoyant, RICS said many agents expect sentiment to deteriorate with headwinds facing the UK economy.

“Storm clouds are visible in the deterioration of near term expectations for both pricing and sales,” said Simon Rubinsohn, chief economist for RICS in a report on Thursday (Oct 13). “It’s difficult not to envisage further pressure on the housing sector as the economy adjusts to higher interest rates and the tight labour market begins to reverse.”

Estate agents surveyed by the RICS had an average of just 34 residential properties on their books. That underscoring the historic lows in housing stock across the UK.

In the lettings market, tenant demand surged while there was a further decline in landlords renting out new properties. Those factors pointed to an increase in rental prices over the next three months, RICS said. BLOOMBERG