UK house prices continue to slip at the national level

Property sales and house prices continued to decline across the UK in January, while new buyer demand and fresh listings were also down, a new survey has revealed. The January 2023 RICS UK Residential Survey results continue to depict a muted market backdrop in UK house prices since 2009, as surging mortgage rates continued to squeeze buyer demand.

According to a closely watched survey carried out by London-based global professional body for surveyors – RICS, at the national level, the latest net balance for new buyer enquiries slipped to minus 47 percent, down from a reading of minus 40 percent last month. The index, which tracks the share of surveyors reporting an increase or drop in prices, registered the 10th successive month of declines and hit the lowest level since April 2009, when the financial crisis had pushed the economy into recession.

“Although some respondents to the January RICS survey have noted a little more interest in the housing market as the new year got underway, the overall tone of the feedback still remains subdued which is not altogether surprising given the jump in mortgage rates since the autumn,” RICS’s Chief economist Simon Rubinsohn warned.

Sales market charts - UK Residential Market Survey. Source: RICS

Respondents to the survey in all parts of the UK saw either a fall in demand or a stagnant trend over this latest survey period. Respondents also continue to see a pull-back in the volume of fresh listings coming onto the sales market, with a net balance of minus fourteen percent of contributors reporting a decline in new instructions over January.

For those unaware, mortgage rates follow medium-term expectations of the Bank of England’s policy on interest rates. Last week, BoE increased interest rates by half a percentage point to a 15-year high of four percent but suggested they may have peaked.  Similarly, England’s Central bank’s data showed that in December mortgage approvals fell to their lowest level since January 2009, excluding the height of the Covid-19 pandemic.

The Rics survey’s findings are in line with data from mortgage provider Nationwide from earlier this month, showing that UK house prices fell for the fifth consecutive month in January, marking the longest decline since the 2008-09 financial crisis.

Sales market charts - UK Residential Market Survey - National and Regional new buyer enquiries. Source: RICS

In the lettings market, tenant demand continues to increase according to a net balance of plus 43 percent of respondents nationally. At the same time, landlord instructions fell once again, with the latest net balance reading of minus fourteen percent representing the tenth straight quarter in which a decline has been reported. As a result of this mismatch, a net balance of plus 51 percent of respondents foresee rental prices being squeezed higher. “The rental market continues to show strong interest from tenants and limited stock available, which is keeping a firm momentum to rental growth,” said Rubinsohn

Meanwhile, the number of market appraisals undertaken over the month was below that found in the equivalent period a year ago, according to a net balance of minus forty-two percent of respondents. Consequently, relatively tight supply conditions appear likely to remain in place across the market in the immediate future.

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