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A closely watched survey shows that a growing number of investigators say UK residential property prices are falling at their highest level since February 2009, with demand and sales also shrinking.
The Royal Institution of Chartered Surveyors said on Thursday its house price balance, which measures the difference between the proportion of surveyors who think house prices are rising and falling, fell to minus 69 last month from minus 68 in August, missing expectations.
Economists polled by Reuters had expected the number to improve to -63.
Data from the Royal Institution of Chartered Surveyors suggests that the softness in the housing market seen in other data will continue in the coming months. Mortgage providers Nationwide and Halifax reported in September that house prices were falling at the fastest annual rate since 2009. The Bank of England said mortgage approvals fell to a six-month low in August.
Rics senior economist Tarrant Parsons said the “downturn” in the housing market was the result of “mortgage affordability remaining extremely tight”.
The Bank of England kept interest rates unchanged at 5.25% in September after raising interest rates at 14 previous meetings. Economists and markets expect interest rates to remain high for some time, which to Parsons means “(housing) trends in the near future are unlikely to deviate significantly from recent conditions.”
Surveyors also reported contractions in agreed sales, new buyer inquiries and house price expectations in both three and 12 months. The only clear sign of stability came from sales expectations for the year ahead, which turned positive, rising to three from negative five last month.
Tom Wilson, a member of the inquiry team and director of consulting firm King West, said: “Sellers need to be pragmatic and realistic if a sale agreement is to be reached.”
The downturn in the housing market affects the broader economy through lower construction output, lower sales of housing-related goods and services, and lower consumer confidence.
The survey found that rents continued to soar last month as fewer households can afford mortgages and landlords pass on higher borrowing costs.
The index tracking net tenant demand was high at 43, in stark contrast to the reported scarcity of listings in the rental market. As a result, survey respondents expect rents to increase by almost 5% on average across the UK over the next 12 months. UK rental prices rose by a record in August, official data showed.
Panellist Mark Killeen, of Coventry, said: “Landlords are feeling the pinch between tax thresholds, a lack of stability and rising interest rates, which is causing rents to rise due to a lack of rental stock.”
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