House prices fell across the UK last month, a closely-watched survey showed on Thursday, as higher borrowing costs and the weakened economic outlook weighed on sentiment.
According to the latest residential survey from the Royal Institution of Chartered Surveyors, a net balance of -25% of participants reported a fall in house prices during November, compared to -2% in October.
It is the lowest reading since May 2020, when the UK was in lockdown early in the pandemic, and well below consensus expectations of -10%. Participants also reported falls across the UK, with the exception of Scotland and Northern Ireland only.
Nor are prices expected to pick up in the coming year, with a net balance of -62% forecasting further falls.
Buyer demand also fell, with a net balance of -38%, although it was an improvement on October’s balance of -53%.
Agreed sales were lower, with a net balance of -35%, the second month in a row that respondents in every region reported a decline. It was, however, marginally stronger than October’s balance of -45%.
Simon Rubinsohn, chief economist at Rics, said: “The overall tone of the latest survey is understandably more downbeat than previously, reflecting the uncertain macro environment and the higher cost of mortgage finance.”
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Higher mortgage rates and a growing belief that house prices will fall are prompting potential buyers to hold back.
“The new buyer enquiries balance continue to signal falling demand, despite rising to -38 from -53 in October. Indeed, the balance still was in the bottom 6% of all past readings since 1999, demonstrating the continued severity of the downturn.
“House prices would recovery until the Monetary Policy Committee can be sure that CPI inflation is back on course to hit the 2% target, enabling it to cut interest rates again. We doubt that point will be reached until late 2023 or early 2024.”
The residential survey found tenant demand continued to rise last month, with a net balance of -35% of respondents reporting an increase. But a net balance of -27% reported a decline in landlord instructions, as the number of rental properties becoming available faltered.
