Sales and house prices continue to decline: RICS

New buyer demand, sales, fresh listings, and prices continued on a downward trend in January, according to the latest RICS UK Residential Survey.

Near-term expectations suggest this picture is likely to remain in place for a while longer as the market adjusts to higher interest rates in the UK.

At a national level, the latest net balance for new buyer enquiries slipped to -47%, down from a reading of -40% last month. This continues to signal a decline in demand, with the January return marking the ninth successive negative monthly reading for new buyer enquiries.

Respondents to the survey in all parts of the UK saw either a fall in demand or a stagnant trend over this latest survey period.

Alongside this, respondents continue to see a pull-back in the volume of fresh listings coming onto the sales market, with a net balance of -14% of contributors reporting a decline in new instructions over January.

Looking at the next twelve months, the sales outlook does not appear to be quite as downcast as before, with the net balance moving to -20% compared to a much weaker reading of -42%
seen in December.

The latest feedback on national house prices points to another monthly decline, with the January net balance softening further to -47% compared to a reading of-42% beforehand.

All regions of England are seeing house prices retreat at present, with the sharpest declines coming across the East Midlands and the South East.

Simon Rubinsohn, chief economist at RICS, said: “Although some respondents to the January RICS survey have noted a little more interest in the housing market as the new year got underway, the overall tone of the feedback still remains subdued which is not altogether surprising given the jump in mortgage rates since the autumn.

“Prices, meanwhile, are now beginning to reflect the shift in balance between demand and supply.

“However, it is questionable how much downside to pricing there is likely to be given that recent macro forecasts from the Bank of England and others are now envisaging a less harsh economic environment this year."

Jeremy Leaf, north London estate agent and former RICS residential chairman, commented: "There’s no doubt that demand is not what it was just a few months ago following sharp rises in interest rates and lives costs particularly.

"However, on the ground, we’ve noticed more need to, rather than want to, move buyers as mortgage repayment and job prospects become less daunting than previously envisaged.

"There is some serious haggling underway but we’ve seen a softening in prices rather than a correction while supply is slowly improving. Reduced competition means transaction numbers are down, taking longer and are more fragile."