House price falls are coming, say estate agents – as buyer enquiries hit lowest level since 2023
House prices are expected to fall over the coming months, with fewer buyers out house hunting and fewer sales being agreed, estate agents have warned.
This bleak outlook is revealed in the latest survey from The Royal Institution of Chartered Surveyors, which asks its estate agent and surveyor members what they are seeing on the ground.
Its members reported that enquiries from buyers about homes for sale fell in March to the lowest levels seen since August 2023, with most parts of Britain seeing a noticeable deterioration over the past couple of months.
In particular, Rics members in East Anglia and London reported buyer enquiries falling off a cliff, as rising mortgage rates and economic uncertainty caused by the conflict in Iran lead would-be movers to hold off.
Rics members across the country also reported the lowest levels of agreed sales since the summer of 2023.
Dan Stocks, a Rics surveyor in Guildford, Surrey, said: ‘As a surveyor carrying out surveys on residential properties, I have noticed a considerable downturn in enquiries since March.
‘This sentiment has been echoed by the local estate agents that I’ve spoken with. Primarily due to the war in Iran and the hike in oil prices having a knock-on effect,’ he added.
Nobody looking: Rics members, of which many are estate agents, are reporting buyer enquiries and sales numbers are down – offering up some of the worst survey results since August 2023
The level of unsold stock on agents’ books has risen to an average of 47 properties, up from closer to 45 at the start of the year.
Looking ahead, near-term sales expectations turned significantly more pessimistic, indicating that Rics members now anticipate a further contraction in sales activity over the coming months.
Stephen Gadsby, a Rics member in Derby from the estate agent Gadsby Nichols, said that for the time of year it was ‘very quiet’ with ‘reduced viewings and sales.’ ‘Confidence seems very fragile,’ he added.
Cheryl La, a Rics member operating in Wolverhampton and Birmingham said that higher mortgage rates have hit the first-time buyer market.
‘Only serious buyers with large deposits are in a position to move whereas the first-time buyers are struggling to raise the additional shortfalls,’ said La. ‘The impact of the Middle East has affected the mortgage market significantly.’
Unsurprisingly, the majority of Rics members now expect house prices to fall over the next three months.
In terms of a slightly longer 12 month view, the latest expectations point to prices remaining flat, though sentiment has deteriorated of late.
At a regional level, Rics members in London, East Anglia, the South East and South West of England were the most downbeat about house prices.
Conversely, those in Northern Ireland and Scotland continue to report rising prices.
Will mortgage rates keep rising?
The fact that this survey is the most negative it has been since the summer of 2023 is due in part to rising mortgage rates.
Since the start of March, banks and building societies have increased mortgage rates at quite a pace.
The lowest fixed rate deals went from around 3.5 per cent to around 4.75 per cent in a matter of weeks.
On a £200,000 mortgage being repaid over 25 years, that could be the difference between paying £1,002 a month and £1,140 a month.
However, while mortgage rates have risen by more than a percentage point over the past month, it’s not yet a repeat of what happened in 2023.
Then, a combination of base rate hikes and worries over inflation figures saw average two-year fixed mortgage rates reach a high of 6.86 per cent in the summer, according to Moneyfacts, while five-year fixed rates hit 6.35 per cent.
Jeremy Leaf, north London estate agent and a former Rics residential chairman, said the scale of mortgage rates rises and fears over a rebound in inflation has spooked many potential buyers.
He said: ‘On the ground, we’re finding it’s not so much the cost of mortgages, it’s the fear of how far and how fast rates – and the cost-of-living – will rise, which is having most impact on buyers.
‘As a result, over the past month we’ve seen a noticeable drop in the quantity of enquiries after it became apparent the conflict would not end quickly.
‘The amount of choice for most property types, particularly smaller one- and two-bedroom flats, is keeping a lid on prices and resulting in lengthening transaction times which is unlikely to change noticeably even if there is an early end to hostilities.’
