Decline in UK house prices 'showing signs of steadying'

Survey by property professionals also finds sales activity remained weak in October

The Royal Institution of Chartered Surveyors said any significant turnaround in house sales was unlikely this year. PA

The rate at which house prices in Britain are falling may be steadying as the end of the year approaches, property experts have said.

Last month, 63 per cent of property professionals reported house prices falling rather than increasing, lower than in September when 67 per cent recorded a fall in numbers, the Royal Institution of Chartered Surveyors (Rics) said.

Latest house prices “suggest the pace of decline, from a national perspective, has levelled off in recent weeks. Nonetheless, the house price metric remains deeply negative across most parts of the UK, even if the latest readings have moved off the lows hit over the past couple of months in the majority of cases,” Rics said in its report.

The institute said survey participants continue to cite a steady increase in prices across Northern Ireland, “bucking the aggregate picture”.

Sales activity remained weak, with a net balance of 25 per cent of property professionals reporting a decline in sales rather than a rise in the month of October.

Sentiment suggests there is unlikely to be any significant turnaround in sales throughout the remainder of the year, Rics said.

However, looking 12 months ahead, property professionals’ sales expectations suggest there will be a more stable outlook in the coming year, the report said.

In the rental market, tenant demand is continuing to rise overall, while the number of landlords instructing property agents is falling.

Amid this imbalance between demand and supply, survey participants predict a rise in rental prices over the next three months.

Over the next 12 months, rents are expected by surveyors to rise by about 4 per cent on average across the UK.

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“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.

“Although base interest rates have now been kept on hold at each of the past two MPC [Bank of England Monetary Policy Committee] meetings, the Bank of England was keen to emphasise that monetary policy is set to stay at a restrictive setting for quite some time yet.

“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.”

Rics senior public affairs officer Dominic Collier said: “More homes need to be built in the right places and more of them need to be affordable.

“Existing homes require more support to improve their energy efficiency, to reduce their bills and help tackle our net-zero targets. We will continue to collaborate with the government in addressing these challenges but also these opportunities.”

Commenting on the report, Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Sellers have a choice.

"If they don’t desperately need to move, they might want to wait it out – until mortgage rates drop and buyers come back.

"If they need to sell, they have to price their home realistically – brutally so.”

The latest data from Rics follows optimism from the Halifax bank, which this week said house prices in the UK had risen for the first time in seven months due to a shortage of properties for sale.

Nationwide Building Society also said house prices in the UK rose by 0.9 per cent in October compared with the previous month.