House prices still falling say surveyors

UK house prices are continuing to fall with the market “stuck deep in negativity”, despite some early signs of stability returning, surveyors have reported. 

“The pricing environment appears to remain challenging”, RICS said in its monthly market survey for February. 

The proportion of surveyors reporting a rise in house prices minus the proportion reporting a fall in prices, the price balance, was -48%, which was similar to the -46% reading in January. 

This comes despite the Halifax yesterday reporting average price growth of 1.1% in February.

About 60% of the respondents to the survey said that prices up to £500,000 were being agreed at below the asking price, which was a new question in the survey. For properties priced between £500,000 and £1m, that proportion was 70%. Zoopla said vendors were having to discount prices by 4.5% to sell last month.  

Tarrant Parsons, RICS’ senior economist, said the housing market was continuing to “adjust to the tighter lending climate, with stretched mortgage affordability still weighing heavily on activity”.

“Given the ongoing weakness in demand, house prices remain on a downward trajectory, and are expected to see further falls through the first half of the year at least,” Parsons added. The housing market was destabilised after the disastrous mini-Budget last September, following which mortgages hit 14-year highs. 

Although he said “near-term expectations suggest market activity will remain generally subdued over the coming months”, he added the survey suggested there were “tentative signs that the ongoing decline in buyer enquiries is now moderating”.

The survey found the level of new enquiries rebounded to -29% in February compared to -45% in January. While the figure was still negative, and the tenth consecutive negative monthly reading, it was the least negative since July last year, RICS pointed out. The price balance forecast for the next three months has gone up from -63% last month to -55% this month. The new sales indicator, which combines several data points, including rates of new buyer enquiries and agreed sales, was still negative in February but the net balance improved from -36% to -26%. 

Other recent housing market indices portray a similar picture. The Halifax showed buyers were becoming more confident last month, which pushed house prices up a little. The Nationwide said UK year-on-year house prices were down in February for the first time since 2020. 

Ahead of the Budget next week, the Royal Institution of Chartered Surveyors (RICS) is calling for the government to invest more in housebuilding. Sam Rees, RICS’ senior public affairs officer, added: “RICS is emphasising the critical role housing has to the UK economy, and the need to boost supply through new builds and commercial property conversions where appropriate whilst conforming to the strictest standards.”

The average time taken to complete sales continued to rise and is now nearing 19 weeks, RICS said. 

The February survey also showed the rental market continued to grow, with a net balance of +32%. Although, landlord instructions fell again at -13% - just at a lesser pace than in recent months.