House prices are falling at their fastest rate since 2009, according to the latest poll of surveyors.
A net balance of 68 per cent of property professionals in August reported declining house prices, marking the most negative reading since the financial crisis, according to the Royal Institution of Chartered Surveyors, which cited the impact of high mortgage rates.
New buyer inquiries also fell during the month, with a net balance of 47 per cent of professionals reporting a drop, deteriorating from a balance of 45 per cent in July.
Simon Rubinsohn, chief economist at the trade body, warned that there was “little sign of any relief”. An overwhelming majority of those polled — a net 67 per cent — said that prices would fall further in the coming few months.
Looking ahead, a net balance of 48 per cent of estate agents and surveyors expected prices to be lower in a year’s time than they are now. The institution said that the results were “indicative of a sustained downward shift in house prices”.
Rubinsohn added: “The latest round of feedback from RICS members continues to point to a sluggish housing market. Critically, affordability metrics still remain stretched in many parts of the country.”
Prices have fallen due to a sharp drop in demand for homes as would-be buyers postponed their plans because of the rapid rise in the cost of mortgages.
The property market downturn began almost a year ago following the September mini-budget of the Liz Truss government. After a brief recovery in the spring, they began to drop again over the summer as interest rates continued to rise.
Reflecting the increased cost of borrowing, a net 47 per cent of those polled by the institution reported another decline in new buyer inquiries in August. A similar proportion said they agreed fewer sales last month than in July — the weakest reading since the early stages of the pandemic in 2020, when the industry was effectively closed.
“Once again, the downward trend in sales activity is evident right across the UK,” the organisation said. Most agents expected sales to fall further over the near term. In addition, the institution said a “yawning gap” between demand and supply in the rental sector had pushed up rents. The majority of letting agents reported an increase in inquiries from new tenants and a drop in landlord instructions. Due to the imbalance, a net 60 per cent expected that rents, already at record highs, would rise further over the next few months.
“Anecdotal comments from contributors that landlords are leaving the sector suggest the challenging environment for tenants is unlikely to improve any time soon,” Rubinsohn said.
A separate report from Zoopla, the online property site, has suggested that rental affordability is at its worst in more than a decade, with costs having increased by 10.5 per cent over the past 12 months. Richard Donnell, executive director at Zoopla, said: “Rents continue to rise faster than earnings, worsening rental affordability.”