RICS: Housing market continues to stall

The Royal Institution of Chartered Surveyors (RICS) has warned of a further weakening of the property market as buyer caution increases.

The trade body’s latest Residential Market Survey for October identified yet another decrease in buyer demand and agreed sales, alongside a halt in house price growth expectations.

New buyer enquiries fell for a sixth successive month in the sales market, as the latest headline net balance weakened further to -55% in October, from -36% in September.

The number of new listings coming onto the market also remains in decline, with a net balance of -17% of respondents at the national level citing a diminishing trend.

Similarly, the volume of market appraisals undertaken over the month is down annually, with the latest net balance slipping to -37% from -20% in September. 

For agreed sales, the latest feedback from RICS members remains firmly negative.

At the headline level, a net balance of -45% of contributors saw a fall in sales during October, down from an already weak reading of -29% previously.

The near-term outlook for sales remain subdued, with the three-month sales expectations net balance slipping deeper into negative territory at -40% compared with -31% in September. 
On a 12 month view, the latest sales expectations net balance of -42% is broadly in-line with the reading of -44% seen in September.

In keeping with the general pattern of a weakening market, the average time to complete a sale from its initial listing has edged upwards, now taking close to 18 weeks, the report said.

At this point last year, the average completion time was closer to 16 weeks.

The latest results also suggest a considerable slowing in house price growth, with the three-month outlook falling into negative territory for the first time in 28 months.

The net balance for the 12-month price expectations series sank to -42% in the latest findings, falling from a reading of -18% last time. 

Simon Rubinsohn, RICS chief economist, said: “The latest feedback to the RICS survey provides further evidence of buyer caution in the face of the sharp rise in mortgage costs. 

“As a result, the volume of activity is likely to slip back over the coming months and realistic pricing is now much more important to complete a sale. 

“The settling down in financial markets could provide some relief although it may be premature to assume this will be reflected in a reduction in lending rates anytime soon. However, the employment picture remains critical to the medium-term outlook and for the time being, that remains solid.”

Commenting on the report, Tom Bill, head of UK residential research at Knight Frank said:  “October was undoubtedly a bad month for the UK property market but it hasn’t necessarily set the tempo for what comes next. 

“As the impact of the mini-Budget fades, mortgage rates will calm down before stabilising. The downwards pressure on prices will reduce to some degree as the economic and political backdrop becomes less disorientating. 

“However, after growth of 25% during the pandemic, we believe it’s a reasonable assumption that house prices have now peaked. We don’t expect the sort of cliff-edge moment seen during the financial crisis but we expect prices to fall back to the level they were at in summer 2021 as rates normalise after 13 years.”