In November, the UK property market saw its biggest property price fall since May 2020. This is as a result of buyer demand and sales activity slowing down because of the increasing interest rates.
Not only property prices saw a fall last month, but new instructions and agreed sales also decreased.
According to the Royal Institute of Chartered Surveyors (RICS) UK Residential Market Survey, their house price net balance (this measures the different between percentage of surveyors seeing rises and fall in house prices) dropped to -25 last month. This figure it below what economists had previously predicted in the Reuters poll.
This is the seventh consecutive month where buyer demand has seen a fall. The net balance was -38% respondents highlighting a drop.
As for sales agreed, a national net balance of -35% was reported in the survey which points to a continued decline in sales activity. This is the second month in the row tat has seen a decline in agreed sales.
New instructions coming to the market saw a decrease too, with a net balance of -9% at the national level.
In relation to regions, the South East and South West of England saw more prices falls unlike Scotland and Northern Ireland where prices continued to increase modestly.
Overall, property sales appeared to be weaker however the decline was less steep than in October. This was when mortgage lenders temporarily withdrew products from the market.
Simon Rubinsohn, RICS chief economist, commented: “The overall tone of the latest RICS Residential Survey is understandably more downbeat than previously, reflecting the uncertain macro environment and the higher cost of mortgage finance. However, anecdotal comments from respondents capture the very real significant divergences in market behaviour at a more localised level.
“Although the headline price balance recorded two consecutive modest monthly falls in prices, and the forward-looking series indicate that this trend will extend through the coming months, the likely ‘job-rich’ recession suggests the downturn in the housing market this time could be shallower compared with past experiences.
“Meanwhile, the imbalance in the rental market remains significant as landlord instructions continue to fall and is consistent with further increases in rents, even if the momentum does appear to be slowing just a little.”
Although the residential sales market is seeing a decline, the rental market is doing better.
Tenant demand is continuing to rise, with a net balance of +35% of respondents who claimed that they saw a pick-up in November.
However, despite tenant demand rising, fresh supply available on the rental market continues to diminish as a net balance of -27% of respondents highlighted a decline in landlord instructions this month, which is predicted to drive rents higher.