House prices fell for the third month in a row in December, along with both the number of new property listings and agreed sales, according to the Royal Institution of Chartered Surveyors (RICS).
Prices fell across all English regions with East Anglia and the South East seeing the steepest declines.
Surveyors told RICS they expect prices to keep falling over the following few months but 61% said that highly energy efficient homes were holding their value.
In the lettings market rents are expected to rise despite slowing demand due to a decrease in the number of landlords offering properties.
Simon Rubinsohn, RICS chief economist, said: “The latest RICS residential survey highlights the emerging challenges in the housing market as new buyers grapple with more costly finance terms and uncertainty over the outlook for the economy.
“Meanwhile, feedback around the lettings market once again demonstrates the need for some concerted thinking about how to create a thriving sector that caters for both the private and ‘affordable’ renter.”
Reaction
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown:
“The house isn’t winning any more, with prices down for the third consecutive month. The trend is gathering pace, as more agents say prices are falling with each passing month, and every region is seeing price drops. The picture looks particularly bleak in East Anglia and the South “East, where prices are dropping most sharply.
Falling house prices have a nasty habit of bedding in, because buyers feel they can save money by waiting a bit longer. This depresses demand, and pushes prices down, so more buyers decide to wait-and-see. It means this may just be the start of it.
“There is one spark of hope. Fixed mortgage rates are on their way down, which could be enough to persuade some buyers back into the market. However, the pressure from higher prices is likely to keep huge numbers of them away. Inflation may be past the peak, but it’s inching downwards at a glacial pace, so prices will continue to rise at quite a lick. With the Energy Price Guarantee going up by another £500 in April – and the Government’s universal lump sums halting at the same time – prospective buyers are going to find their finances stretched even further.
“The fact that energy bills are such a worry right now has brought a boon for sellers with particularly energy-efficient homes. 61% of the agents said that these were holding their value in the current market, and 41% of them said these sellers were chancing their arm, and bumping up the asking price.
“If you’re put off by the falling market, and choose to rent for longer, the market will deal you another blow – because rents are still rising. December saw yet another month of disappearing landlords – as they sell up and get out of the market. Meanwhile, although the growth in tenant numbers has started to slow, it’s still up for yet another month, and agents expect rents to keep climbing.”
Tomer Aboody, director of property lender MT Finance:
“The ongoing impact of cost-of-living increases, along with mortgage rates, has led to a weakening in sales in the property market, as expected.
“With buyers and homeowners waiting to see what the next few months hold, it’s not surprising that lower transaction levels are being seen. Fewer people are prepared to take the plunge and make a commitment as significant as buying a house at this time.
“With some possible optimism coming from a couple of months lower inflation, along with government plans to reduce it by half, there could be light at the end of the tunnel. As the impact of this filters through, it could well bring some much-needed confidence back to buyers and sellers alike.”
