Housing demand falls amid rate rise concerns

Housing demand falls amid rate rise concerns

Activity has dropped in housing market amid price increases, according to the Royal Institution of Chartered Surveyors.

The UK housing market continued to lack momentum in September as demand from new buyers and sales fell again.

The shift in interest rate expectations contributed to buyer caution in a slowing market, according to the September Rics UK Residential Market Survey.

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Surveyors reported a decline in both sales and new buyer enquiries with sentiment now flatter than at any point since the referendum result.

In September, 20 per cent more respondents noted a fall rather than rise in demand from would-be buyers, extending the run of negative readings into a sixth month.

Simon Rubinsohn, chief economist at Rics, said: “It was always questionable to talk about the housing market as a single entity but the stark divergence in key readings from the latest Rics survey demonstrates in the clearest possible terms just how important the regional narrative is at the present time.

“In part, this is a reflection of affordability constraints hitting the higher priced segments of the market. It is perhaps also indicative of a shift in economic momentum in the face of the increasing possibility of the first hike in base rates in over ten years.

“That said, we are continuing to see evidence of shortage of stock both in the new build and second-hand market.

“And despite the announcements at the recent Conservative Party conference, it is hard to envisage this changing any time soon.

“Against such a backdrop, prices in general are likely to remain elevated and indeed, as the survey indicates, continues to rise over the medium term in most parts of the country.”

Alongside this, 15 per cent more respondents reported a fall in agreed sales rather than a rise - which is the lowest since July 2016.

When broken down regionally, London and the south east were at the forefront of the decline in sales, but weakness in transactions was widespread during September.

In fact, only Wales and the south west saw an increase in sales, while all other parts of the UK saw sales flat.

Prices also held steady in September at the national level, with 6 per cent more respondents seeing a rise in prices - demonstrating a marginal increase.

In the lettings market, interest from prospective tenants edged up during September with 10 per cent more respondents noting a rise, rather than a fall, in demand.

Landlord instructions declined alongside this, meaning listings have not seen any growth going back 14 months.

Rental expectations are subdued in the near term, with respondents to the Rics survey anticipating only a marginal rise on a UK wide basis.

Sam Instone, chief executive at London-based AES International, said: “Elements such as recent changes to tax rules and rates have to be factored in when determining the profitability of any property investment in the UK.