According to recent data from the Royal Institution of Chartered Surveyors (RICS), housing demand and sales volumes in the U.K. have once again experienced a decline in September. This downward trend can be attributed to the impact of interest rates on mortgage availability.
The residential survey conducted by RICS highlights consistently weak buyer demand in the market. Additionally, there is a noticeable gap between tightening lettings supply and increasing rental demand, which is expected to result in further rent rises.
House prices in the U.K. continue to follow a downward trajectory, with the national house price index showing a percentage decline of minus 69% for September. This is only a marginal change from last month’s figure of minus 68%. The index measures the proportion of surveyors observing an increase or decrease in house prices.
While the recent pause in monetary policy tightening provided some relief to the market, it is expected that interest rates will remain unchanged for an extended period. Consequently, there is little likelihood of significant deviations from the current market conditions in the near future, according to RICS senior economist Tarrant Parsons.
Looking ahead, the outlook for house prices remains subdued, although slightly less negative than before. Expectations for the next 12 months indicate a continued decline in house prices, with the net balance moving from negative 50% to negative 33% in September.
Due to an imbalance between housing demand and supply, respondents predict that rental prices will increase by an average of close to 5% over the next year.