Estate agents report a fall in house prices across the UK ending more than two years of growth

Estate agents reported a drop in house prices across the country in October, according to the latest RICS survey, ending a 28-month streak in which house prices were rising.

In September the survey, which takes into account the views of RICS member estate agents across the UK, revealed a net positive rating of 30 per cent when agents were asked about house prices, while in October it felt markedly less than 2 percent.

RICS calculates net ratings by taking the number of agents reporting a fall in prices from those reporting an increase. For example, if 30 percent reported an increase and 5 percent reported a drop, the net balance would be 25 percent.

However, the headline figure masks regional price differences. Respondents in areas such as East Anglia and the South East of England were most likely to notice price drops, posting net balances of -31 per cent and -16 per cent respectively.

By contrast, respondents in Northern Ireland and Scotland continued to report an upward trend in house prices, even if the pace of growth was slower than earlier in the year.

Looking ahead, respondents across the UK are now generally of the opinion that prices will decline somewhat over the next year.

October’s rating suggests “home price growth is stalling,” the commenter in the survey said.

At the same time, the number of buyer inquiries fell for the sixth consecutive month to negative 55%, falling even more than September’s negative 36%.

Also, for the second month in a row, the number of inquiries fell across all UK regions.

Simon Rubinsohn, Chief Economist at RICS, commented: ‘The latest comments from the RICS survey provide further evidence of buyers’ caution in the face of sharply rising mortgage costs.

“As a result, the volume of activity is likely to decline in the coming months and it is now much more important to set realistic prices to complete a sale.

‘The stabilization of financial markets could provide some relief, although it may be premature to assume that this will be reflected in a reduction in interest rates in the short term. However, the employment outlook remains critical to the medium-term outlook and remains strong for the time being.’

The real estate agency Savills has forecast that prices will fall 10% next year before rising 1% in 2024. In May, the real estate agency forecast a fall of only 1% in 2023, but the sharp increase in mortgage rates has led to a bleaker picture.

Simon Wall of Stephanie Macnab Estate Agents, said: ‘The steam has definitely left the market here, although activity remains at what would otherwise be considered a reasonable level.

‘There is greater buyer strength with tougher initial negotiations and renegotiations after the survey. Hopefully the calm in the economic outlook will improve things.

“At the same time, the number of new listings entering the market also continues to decline with a net balance of -17 percent of respondents nationally citing a drop.”

Marion Currie of the Galbraith Group in Dumfries and Galloway, Scotland, said that while there is still a lot of interest in available properties, interest is waning for the winter.

“The group of buyers who have lost other properties in the last two years is still there, but it is shrinking,” he added.

In the rental market, rents are expected to continue to rise as renter demand continues to increase at a solid pace, with a net balance of 46 percent of survey participants noting an increase in October.

At the same time, however, homeowner instructions fell again based on a net balance of -14 percent of respondents.

In a year, respondents expect rents to have increased about 4 percent nationally