A balance of 63% property professionals reported house prices falling rather than increasing in October, according to the latest figures from the Royal Institution of Chartered Surveyors (Rics).
New buyer enquiries also saw a net balance of -28% during October, marking eighteen successive months in which this indicator has been in negative territory.
Nevertheless, the latest reading is a little less downcast relative to the figure of -37% seen beforehand and also represents the least negative return since back in May.
When viewed at the regional/country level, virtually all parts of the UK continue to display negative demand readings, albeit the North West of England and Northern Ireland exhibit a much flatter picture compared to the headline average.
Commenting on the latest figures Charles Stanley chief investment analyst Rob Morgan said: “Overall, house prices have proved quite resilient so far despite the huge ramp up in interest rates over the past two years, thanks largely to rising wages and the rental market offering fewer options at affordable prices”.
However, he pointed out that the Rics survey indicated that activity is subdued with the balance of sales, buyer enquiries and new instructions all negative.
“It is consistent with a picture of transaction volumes drying up and a gently downward trajectory for prices at the national level, something that is likely to accelerate as the era of cheap mortgages disappears further into the rear-view mirror”.
Morgan suggested it would not be a surprise to see price falls continue well into 2024 as more households become affected by rising interest rates and relatively few people able to commit to make their first purchase or trade up.
He added: “Just as ultra-low interest rates helped fuel house price rises by making borrowing more affordable, higher rates are now dampening activity and prices, a headwind unlikely to abate any time soon. The battle with inflation is far from over, which means the clouds over the economy and the housing market are likely to persist.
“Although the Bank of England may have reached the end of its cycle of increasing interest rates, they are long way from thinking about cutting them. Inflation is way above the BoE’s 2% target, and geopolitical fractions and wage increases may yet mean it proves stubborn.”
