England (Commonwealth Union)_According to Britain’s official surveyors organisation, house prices stagnated last month after more than two years of expansion, as a significant spike in mortgage rates fuelled buyer caution.
The Royal Institution of Chartered Surveyors (Rics) has forecast that rents will rise by 4% in a year due to a mismatch between strong tenant demand and available rental housing.
Rics claimed that across the UK, 2% more property experts reported declining rather than growing home values, halting a 28-month run of growth readings. There was, however, some geographical diversity in price movements. While prices in East Anglia and the southeast of England were falling, surveyors said there was still an upward trend in Scotland and Northern Ireland, albeit at a slower pace than earlier this year.
In October, new buyer inquiries declined for the sixth month in a row, and survey response on buyer demand in the UK was negative. It now takes an average of 18 weeks to sell a home, up from 16 weeks a year ago.
“The new reaction to the Rics poll provides further evidence of buyer caution in the face of the steep spike in mortgage costs,” said Simon Rubinsohn, chief economist at Rics. “As a result, the volume of activity is anticipated to decline in the next months, and realistic pricing is now much more crucial in order to complete a transaction.”
“An improvement in financial markets could bring some comfort, but it may be premature to expect a fall in lending rates any time soon,” Rubinsohn noted. “As far as the lettings market is concerned, the imbalance between demand and supply remains exceptionally protracted, resulting in rent expectations in the poll remaining at elevated levels, and it is difficult to see this reversing any time soon.”
According to Tom Bill, head of UK residential research at estate agency Knight Frank, “As the effect of the mini-budget wears off, mortgage rates will cool before stabilising.” Price pressure will ease to some extent as the economic and political backdrop becomes less disorienting. “However, after a 25% increase during the epidemic, we believe it is reasonable to assume that property values have already peaked,” he added.
It comes as housebuilder Taylor Wimpey announced that it would build fewer houses this year than originally expected, citing a dip in sales and a steep increase in the cancellation rate to 24% in the previous six months, up from 14% a year earlier.
A day earlier, rival Persimmon reported a slowdown in demand, with new-build house sales and prices falling and cancellation rates rising to 28%.
