The property market is losing momentum as soaring interest rates and economic uncertainty stall buyer activity, according to the Royal Institute of Chartered Surveyors (RICS).
RICS said house prices were continuing to edge higher for now although the pace of growth is easing noticeably across the country.
In terms of demand the number of enquiries from potential homebuyers fell for a fifth month in a row in September with sales at the lowest level seen since May 2020.
The flow of new instructions to sell remained very much in decline with 15% of RICS respondents saying they had seen a decline in fresh listings during August.
Simon Rubinsohn, chief economist at RICS, said: “Storm clouds are visible in the deterioration of near-term expectations for both pricing and sales.
“The turmoil in mortgage markets in recent weeks has compounded the increasing level of economic uncertainty resulting from higher energy bills and the wider cost of living crisis, shifting the dial in the housing market.”
Reaction
Tomer Aboody, director of property lender MT Finance:
“Due to the uncertainty surrounding mortgage rates, along with the increase in the cost of living, it’s no surprise that negative sentiment is emerging, suggesting that the housing market is slowing down.
“Until Government and Bank of England policies are aligned, we will continue to face the uncertain shift in rates which means that buyers, along with sellers, would rather wait until things stabilise before making a move.
“This will mean a static market on the whole rather than price falls, unless sellers are forced to sell, which could be the case in some instances.
“Lenders will have to be helpful, sensible and imaginative going forward.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“The RICS survey has always been regarded as one of the most accurate, not least because data is collected from surveyors and agents ‘at the sharp end’ just before release.
“New buyers are pausing for breath while considering the pace and size of future interest rate hikes, so activity has reduced. Like us, many are waiting to see whether worries about mortgage repayments rising more quickly than expected outweigh benefits from cuts in stamp duty and other taxes – particularly for first-time buyers.
“Risks of a correction are greater but the market has proved its resilience repeatedly in the recent past. We’re told more borrowers have higher loan-to-value mortgage debt than in the last financial crisis of 2008 but we’re not seeing signs of a major correction in our offices yet.”
