House prices are still falling, according to a survey of property agents and surveyors.
The latest poll by the Royal Institution of Chartered Surveyors (Rics) suggested that home buyer activity continued to be weighed down by higher mortgage rates in October.
The monthly survey takes the temperature of Rics’ surveyor and valuer members, and gives a snapshot of what is happening on the ground in the property market right now.
Downturn: The latest survey by Rics said home buyers were feeling ‘subdued’
House prices remain on a downward trajectory at the national level, according to the survey.
While the October net balance of -63 per cent is a slight improvement on September and August, it remains extremely gloomy by historic standards.
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 per cent say prices have fallen and 10 per cent are saying prices have risen, this would result in a net balance of -63 per cent.
Under this scenario, it would also mean that the additional 17 per cent of those surveyed would have stated that prices were unchanged.
Falling: House prices remain on a downward trajectory, according to the Rics survey
Rics members’ expectations for house prices point to further falls over the next three to 12 months.
Sentiment on prices for the year ahead was most negative across the East Midlands, West Midlands and Yorkshire & the Humber, with each region returning net balances below -60 per cent.
James Watts of Bradford based agent, Robert Watts Estate Agents said: ‘It is noticeable that higher-value houses are struggling and sales have dropped significantly.
‘However, we feel buyers upsizing now have more bargaining power and may get a better deal than in the past two years.
Tom Wilson, a Rics member based in Stamford, Lincolnshire, added: ‘There is interest from buyers, but no aggression when making offers. Sellers [are] having to adjust their horizons to accommodate.’
By way of contrast, Rics members based in Scotland and Northern Ireland are anticipating rising house prices over the next twelve months.
‘Another month of a resilient Glasgow property market for sales,’ says Grant Robertson, a Rics member based in Glasgow.
‘Whilst there is evidence of values dropping within the UK, Glasgow and the west of Scotland continue to see no more than a softening of upward pressure on values.’
Gloomy: Sentiment on prices is most negative across the East Midlands, West Midlands and Yorkshire & the Humber
Buyers on the fence: Virtually all parts of the UK continue to report negative buyer demand, apart from the North West of England and Northern Ireland
Buyer demand remains weak
One major factor contributing to these house price falls is declining buyer demand, which will likely be down to higher mortgage rates.
The majority of agents reported fewer buyer enquiries during October, marking eighteen successive months in which this has been in negative territory.
Nevertheless, its latest reading is the least negative survey result since May.
Virtually all parts of the UK continue to report negative demand, apart from in the North West of England and Northern Ireland.
‘It has changed from a sellers’ market to a buyers’ market, says Trevor Brown, a Rics member based in Southend-on-Sea. ‘There is more available property and less willing purchasers.
‘Vendors have to be realistic and prepared to accept a lower offer to achieve a sale.
‘The auctions are full of tenanted flats as landlords flee the market – due to high interest rates and taxation.’
Short supply of new listings
The flow of new instructions coming onto the sales market continues to slow, according to the Rics survey.
Alongside this, Rics members continue to report the number of market appraisals (when agents come to value homes) this month was below the equivalent period of last year.
This suggests the supply of homes coming to the market will not improve in the immediate future.
Alex Mcneil, a Rics member from Huddersfield added: ‘There has been a further slowdown in new instructions, however, some established investors are starting to sell.
‘It will be a difficult winter with a thin pipeline for the New Year.’
Sales volumes still struggling
The number of agreed sales remained weak in October, with the latest net balance at -25 per cent.
This was less negative than the figures of -45 per cent and -35 per cent recorded in August and September respectively.
Over recent months there have been a number of estate agents and housebuilders announcing staff cuts amid the downturn.
Estate agents including The Modern House, Strike and Knight Frank alongside housebuilders, Bellway, Vestry and Persimmon have all announced they will be cutting their work force in recent months.
The Rics survey suggests there is unlikely to be any significant turnaround in the sales picture through the remainder of 2023.
Struggling: On average, each estate agent branch is making fewer than 15 sales in the past three months on average, according to the Rics survey
Over the next 12 months, the sales expectations series posted a net balance of zero.
This suggests a broadly stable outlook for the sales market over the year to come.
Alex Howard Baker, a Rics member based in Putney said: ‘We have some very good buyers still willing to proceed. But sellers perceive the market to be awful and generally choose not to come anywhere near it.
‘It’s a stand-off, and buyers are expecting further price drops unless wage growth comes to the rescue to mitigate higher mortgage costs [which is] unlikely.’
David Paris, a Rics member from Upminster added: ‘The market is hampered by a lack of new instructions.
‘There is a good demand for homes priced over £1million but properties under £800,000 are difficult to sell. Values of flats have dropped due to lack of demand from first time buyers.’