Cheers! House price declines slowing in time for Christmas

House prices are continuing to dwindle but the pace of decline is steadying in the run up to Christmas and the New Year, the Royal Institution of Chartered Surveyors (RICS) reports today.

While near term sales expectations point to market activity remaining subdued over the next few months RICS (main picture) says that the pace of decline appears to be stabilising.

IMBALANCE

However it also warns that the imbalance between tenant demand and landlord instruction remains strong.

The RICS Residential Survey for October 2023 points to an overall subdued market with a net balance of -25 (-35 in September) for agreed sales.

But its 12-month sales expectations indicator posted a net balance of 0 which RICS says signals ‘a more stable outlook’ for the sales market over the year to come.

The number of new instructions coming onto the sales market remained in the negative.”

Meanwhile, the number of new instructions coming onto the sales market remained in the negative this time around, recording a net balance reading of -7 (-15 in August).

Across the lettings market, a net balance of +33 of survey respondents noted an increase in tenant demand in the three months leading up to October. But despite the positive upswing this is the most modest reading for tenant demand since Q2 of 2021 (+59).

At the same time, landlord instructions remain in the negative with a quarterly net balance of -18 in Q4 (-28 in July Q3).

CAUTION

Tarrant Parsons, RICS Senior Economist, says: “Plenty of caution remains.

“Although base interest rates have now been kept on hold at each of the past two MPC meetings, the Bank of England was keen to emphasise that monetary policy is set to stay at a restrictive setting for quite some time yet.

“As such, mortgage affordability will remain stretched over the near-term, leaving little prospect of a strong rebound in residential sales volumes, even if expectations have now moved away from cyclical lows”.

And Dominic Collier, RICS Senior Public Affairs Officer, adds: “The King’s Speech earlier this week provided a unique opportunity for the government to reaffirm its housing agenda.

“However, many questions and challenges remain. More homes need to be built in the right places, and more of them need to be affordable. Existing homes require more support to improve their energy efficiency, to reduce their bills and help tackle our net-zero targets.”

EXPECTED

Melfyn Williams, Director at Anglesey and Gwynedd-based Williams And Goodwin, says: “Most would agree that the last month has been what is normally expected at this time of year.

“Whilst activity is down a little on previous months this is only to be expected as some sellers are already casting one eye onto the New Year market.”

And John Corben, Senior Partner at Swanage-based Corbens, adds: “The market remains quiet. Few sales are being achieved and most applicants are dependent upon a sale of a property.

“The situation is likely to continue throughout the winter months and sellers need to be realistic as far as pricing is concerned.”