Property sales and house prices continued to decline across the UK in January, while new buyer demand and fresh listings were also down, surveyors have reported. A net balance of -47% for new buyer inquiries was reported, down from -40% in December, according to the latest monthly snapshot from the Royal Institution of Chartered Surveyors (Rics). It was the weakest monthly reading since April 2009 and the ninth successive negative monthly reading for new buyer inquiries.
RICS said all the indicators point to a further slowdown in the housing market in the coming months, as borrowing costs have risen sharply and household incomes are squeezed by the cost-of-living crisis. The Bank of England raised interest rates for the 10th time to 4%, but said inflation is likely to have peaked, and a recession would be less severe than previously feared.
The RICS survey measures the difference between the number of estate agents and property surveyors reporting increases and those experiencing decreases in different areas of the property market. The volume of fresh listings coming on to the market was also down, according to the survey, with a net balance of -14% respondents reporting a decline in new instructions during January.
Meanwhile, the latest feedback on national house prices points to another monthly decline, as the net balance weakened further to -47% compared with a reading of -42% in December. All regions of England are seeing house prices retreat at present, with the sharpest drops reported across the east Midlands and the south-east.
Charlie Barrett of DM Hall Chartered Surveyors in Edinburgh told: “December and January were typically slow. The general rhetoric from potential sellers is ‘wait and see’. A steady increase in market activity in Edinburgh and the Lothians is anticipated through the spring into the summer. Interest rates and cost of living are undoubtedly having an impact.”
But despite the broadly gloomy feedback, there does appear to be some more positive noises coming from the sector about the coming year. While remaining in negative territory, the sales outlook for the next 12 months has halved to -20% from -42% in December.
Simon Rubinsohn, The Chief Economist at RICS, said: “Although some respondents have noted a little more interest in the housing market as the new year got under way, the overall tone of the feedback still remains subdued which is not altogether surprising given the jump in mortgage rates since the autumn.”