UK surveyors facing weakest housing market since 2023: report

BRITISH property agents are more downbeat about home sales than at any point in over three years, according to a survey showing that soaring mortgage costs are sapping demand.

The Royal Institution of Chartered Surveyors said that its gauge of expected sales over the next 12 months declined to minus 17 in October, the lowest reading since July 2023. The outlook for prices also deteriorated, with agents suggesting that home values could drop 1 per cent in the year ahead.

The energy shock triggered by the Iran war is tightening its grip on the UK housing market by eating into disposable incomes and driving up borrowing costs.

Key mortgage rates are now around 6 per cent, up from 4.83 per cent before the conflict began, with economists and investors expecting the Bank of England (BOE) to keep raising interest rates to tame inflation.

“Home buyer demand remains subdued, and respondents are bracing for a weaker year ahead for sales given the persistent macroeconomic challenges being faced,” said Tarrant Parsons, head of market research and analysis at RICS. “Mortgage rates are likely to remain elevated for longer, thereby continuing to weigh on the market.“

RICS’ indicator of house prices declined for a second month in October.

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Pressure was greatest in London, East Anglia, the West Midlands and the South East of England. Surveyors also said agreed that sales declined in October, while buyer demand stagnated or fell across all parts of the UK. 

“House prices are falling, mortgage rates are climbing and buyer confidence is an all-time low,” Howard Davis, an estate agent in Bristol, said in comments accompanying the RICS report. “We continue to lower prices to attract buyers.”

The report adds to evidence that the housing market is coming under strain. Lender Nationwide Building Society said home prices stagnated in October, while BOE data showed demand for home loans in September hit the lowest since December 2023. BLOOMBERG