House prices are falling across the UK, with estate agents at their gloomiest since 2009 and more than two-thirds of the most expensive properties selling for below their asking price, according to a survey published on Thursday.
The Royal Institution of Chartered Surveyors said its house price balance, which measures the difference between the percentage of surveyors seeing rises and falls in house prices, fell to minus 48 in February from minus 46 in January. That is the lowest figure since April 2009.
The professional body also found that 70 per cent of properties marketed for £500,000 or more sold for less than their asking price, a figure that dipped to 60 per cent for less expensive ones.
Tarrant Parsons, RICS senior economist, said the “tighter lending climate, with stretched mortgage affordability still weighing heavily on activity” was responsible for the fall in prices.
He added that they remained “on a downward trajectory, and are expected to see further falls through the first half of the year at least”.
Data from the Bank of England this month showed that the average interest rate on new mortgages rose to 3.9 per cent in January, the highest since 2010. Prospective buyers have also been hit by inflation, which has eased since last year but continues to run at To install double digits.
Surveyors told the RICS survey that they expected house prices to fall in the next three months, with a net balance of minus 55, largely unchanged from the previous month. They also forecast prices to contract in the year ahead, but the score improved to minus 27 from minus 40 in January.
The findings support analysts’ expectations of more expensive mortgages, resulting in a significant hit to the market.
Gabriella Dickens, economist at the consultancy Pantheon Macroeconomics, said house prices would probably fall over the coming months to roughly 8 percent below their August 2022 peak. Martin Beck, chief economic advisor to the EY Item Club, a forecasting house, predicted a larger peak-to-trough fall of 10-15 per cent.
With many people unable to afford a mortgage or a deposit, the letting market continued to grow in February. Tenant demand increased to a net balance of 32, while rent price expectations for the next quarter remained elevated at 45.
The survey also showed some early signs of stabilization in the sales market, with the balance of new buyer inquiries rising from minus 45 to minus 29 month on month. That was the slowest pace of decline since July last year, although it also indicated the tenth consecutive monthly decline in demand.
The index for sales agreed was still negative at minus 26, but sales expectations for the year ahead largely stabilized, registering a net balance of minus 8 compared with minus 20 in January.
Surveyors continued to report a fall in the number of properties coming on to the market, leaving inventory close to its lowest level since records began in 1978.
Sam Rees, senior public affairs officer at RICS, said the housing market had a “critical” role in the UK economy and emphasized the need “to boost supply through new builds and commercial property conversions”.