The Royal Institution of Chartered Surveyors (RICS) said the property market slowed in July after a jump in mortgage costs reduced both buyer demand and the volume of sales.
RICS's house price balance, which measures the difference between the percentage of surveyors reporting price rises and falls, dropped to -53 in July from a downwardly revised -48 for June.
That’s a larger fall than expected, and the lowest reading since April 2009.
The measure of sales agreed fell to -44% in July, the weakest since the start of the pandemic and down from -36% in June.
The survey of estate agents and property appraisers showed price declines were the widest-spread since 2009, just after the financial crisis.
“The recent uptick in mortgage activity looks likely to be reversed over the coming months,” Simon Rubinsohn, chief economist at RICS, said in the report. He noted growing “economic uncertainty, rising interest rates and a tougher credit environment” were weighing on the market.
Gabriella Dickens at Pantheon Macroeconomics expects a peak-to-trough fall in house prices of around 8%, with prices bottoming out early next year.
She pointed out the net balance of surveyors reporting that prices have risen over the past three months fell to its lowest level since early 2009 while in addition, new buyer enquiries balance was pretty much unchanged.
The weakness “makes sense”, she felt, given the jump in mortgage rates, pointing out this has lifted the proportion of disposable incomes soaked up by mortgage repayments for the average two-earner household to 29%, from a stable 20% in the 2010s.