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A greater proportion of surveyors are reporting falling UK residential property prices than at any time since February 2009, with demand and sales volumes also contracting, according to a closely watched survey.
The Royal Institution of Chartered Surveyors on Thursday said its house price balance, which measures the difference between the percentage of surveyors seeing rises and falls in home prices, fell to minus 69 last month from minus 68 in August, missing forecasts.
Economists polled by Reuters had expected an improvement to minus 63.
The Rics figures suggest the weakness in the housing market seen in other data will continue in the months ahead. Mortgage providers Nationwide and Halifax reported in September that house prices were falling at the fastest annual pace since 2009. The Bank of England said mortgage approvals dropped to a six-month low in August.
Tarrant Parsons, senior economist at Rics, said the “subdued” property market was the result of “mortgage affordability still incredibly stretched”.
The Bank of England left interest rates unchanged at 5.25 per cent in September after increasing them at the 14 previous meetings. Economists and markets expect interest rates will remain high for some time, which for Parsons means “there is little prospect of [housing] trends deviating much from the recent picture in the immediate future”.
Surveyors also reported contractions in the volume of agreed sales, new buyer inquiries and house price expectations for both the three-month and the 12-month horizon. The only clear sign of stabilisation came from sales expectations in the year ahead, with that index turning positive, rising to three from minus five the previous month.
Tom Wilson, a panellist of the survey and director at the consultancy King West, said: “Sellers are having to be pragmatic and realistic if sales are to be agreed.”
The downturn in the housing market affects the wider economy via lower construction output, lower sales of housing-related goods and services and lower consumer confidence.
With fewer households able to afford a mortgage and landlords passing on their higher borrowing costs, rents continued to surge last month, the survey found.
The index tracking net tenant demand was high, at 43, in contrast with a reported scarcity of listings becoming available on the rental market. As a result, survey respondents pencilled in close to 5 per cent average growth in rental prices across the UK over the next 12 months. Official data showed that UK rental prices rose at a record pace in August.
Mark Killeen, a panellist in Coventry, said: “Landlords are feeling the pinch between tax thresholds, lack of stability and interest rate increases, this is pushing rents into higher brackets due to lack of rental stock.”
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