According to the latest survey from the Royal Institution of Chartered Surveyors (Rics), buyer demand has fallen for the seventh consecutive month.
This shows that activity is weakening across the market following a higher cost of living, increasing energy costs and rising interest rates. These combined factors are weakening overall activity.
For the seventh month in a row, there is a net balance of -38%, compared to the less negative -53% reported in October. Rics expect this to continue as we head towards 2023.
A national net balance of -35% was reported for the number of agreed property sales, demonstrating the continuing decline in sales activity. This is less negative than the reading of -45% shown in October, and it’s the second month in a row that the survey respondents in every UK region reported a decline in agreed sales.
The latest Rics survey’s measure of new instructions coming onto the property market is relatively negative, with a balance of -9% at the national level.
The average stock levels for estate agents did rise slightly from 34 to 35 properties per agent’s office.
In addition to stock levels, a balance of -25% of those surveyed witnessed a drop in national house prices, and this is the lowest reading since the spring.
Prices in Scotland appear to be edging higher than in the rest of the UK but at a slower rate than previously. Over the coming months, a balance of -61% of respondents to the survey predicted a further fall in house prices.
Tenant demand is rising, with a fresh supply of properties on the rental market dwindling.
Rics chief economist Simon Rubinsohn says: “The overall tone of the latest Rics Residential Survey is understandably more downbeat than previously, reflecting the uncertain macro environment and the higher cost of mortgage finance.”
“However, anecdotal comments from respondents capture the very real significant divergences in market behaviour at a more localised level.”
“Although the headline price balance recorded two consecutive modest monthly falls in prices, and the forward-looking series indicate that this trend will extend through the coming months, the likely ‘job-rich’ recession suggests the downturn in the housing market this time could be shallower compared with past experiences.”
“Meanwhile, the imbalance in the rental market remains significant as landlord instructions continue to fall and is consistent with further increases in rents, even if the momentum does appear to be slowing just a little.”