UK house prices are falling less sharply as sales pessimism eases, according to a survey of estate agents that suggests the property market is stabilising following the recent surge in mortgage costs.
The Royal Institution of Chartered Surveyors (RICS) said its house price balance, which measures the difference between the percentage of surveyors seeing rises and falls in house prices, rose to minus 39 last month from minus 43 in March, the highest figure in five months, and up from the 14-year low of minus 47 in February.
But Simon Rubinsohn, RICS's chief economist, cautioned: “Although the newsflow around housing does appear to have steadied over the past month, key indicators from the RICS survey point to a series of challenges in both the sales and lettings space.
“Most notably, buyer demand still appears to be subdued in the face of relatively high borrowing costs, the prospect of at least one more interest rate hike and ongoing affordability challenges.”
Expectations about future house prices also improved to minus 16 in April from minus 24 in March, well above the minus 61 posted in November last year.
Gabriella Dickens at Pantheon Macroeconomics said the survey “suggests the downturn in the housing market has further to run”.
“With mortgage payments likely to remain unaffordable or undesirable for many potential buyers, we expect the stock of unsold properties to continue to accumulate, until sellers reduce their prices further,” she said.
“We remain comfortable with our forecast for a peak-to-trough fall of around 8%, which implies that the official measure still has 6% further to drop from February’s level,” she added.
Sarah Coles, head of personal finance at Hargreaves Lansdown, commented: “The green shoots of optimism in the property market risk being crushed by cruel reality.
“Demand has now fallen every month for the past year, and with sales dwindling and house prices dropping, it’s proving more difficult to shift properties. It’s taking almost 20 weeks from first listing to final completion, as cautious buyers guard against hasty decisions.”