UK sees most widespread house price falls since May 2020: RICS

8:33 pm Wednesday, December 07th, 2022

By David Milliken

LONDON (Reuters) – Britain saw the most widespread house price falls since early in the COVID-19 pandemic last month, as demand from buyers and sales activity slowed in the face of higher borrowing costs, a survey showed on Thursday.

The Royal Institution of Chartered Surveyors (RICS) said that its house price net balance – which measures the difference between the percentage of surveyors seeing rises and falls in house prices – sank to -25 in November.

This was the balance’s lowest since May 2020, and below the -10 which economists had forecast in a Reuters poll. Looking at the year ahead, the balance for price expectations was -61.

“The overall tone of the latest RICS Residential Survey is understandably more downbeat than previously, reflecting the uncertain macro environment and the higher cost of mortgage finance,” RICS chief economist Simon Rubinsohn said.

Price falls were particularly common in southeast and southwest England, while prices continued to rise modestly in Scotland and Northern Ireland.

Overall sales were weaker, though the decline was less steep than in October, when many lenders temporarily stopped approving new mortgages due to bond market turmoil after a fiscal statement by Liz Truss’s short-lived government.

The RICS survey matches other measures of house price weakness from British mortgage lenders. Halifax reported on Wednesday that house prices recorded their biggest monthly drop since 2008 in November, falling by 2.8%, while Nationwide measured its biggest fall since June 2020.

A Reuters poll of economists and property market analysts last month forecast house prices would drop around 5% next year, having risen about 24% since early 2020, according to official data.

Rubinsohn said it was possible that the fall in house prices might be fairly modest, as unemployment was low and not forecast to rise as much as in previous downturns.

In contrast to falling house prices, rents are on course to keep rising, RICS said. The number of tenants is continuing to increase, while fewer landlords are offering properties.

(Reporting by David Milliken, Editing by Kylie MacLellan)