Britain suffers biggest housing downturn since financial crisis
A general of a person walking past advertisements in a estate agents window in Islington, north London.
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Britain’s housing market is teetering on the brink, as overcooked house prices coupled with rising mortgage rates trigger widespread downturn in sales.
House price falls were more widespread in July than at any point since 2009, according to the Royal Institute of Chartered Surveyors (Rics) residential market survey of estate agents.
At the same time, house sales collapsed on a scale not seen since 2007, Rics said.
As the inflated market unravels, the net balance of agents reporting downturn in agreed sales has more than quadrupled since May.
Awoman looking at advertisements in an estate agents window, as the average UK house price fell by 0.3% in July, marking the fourth monthly decline in a row, according to Halifax.
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Demand has fallen across the board, with buyer inquiries down in every region of the UK in July.
Buying activity is estimated to be around 20 per cent lower than it was in 2019, according to Nationwide.
House prices fell 0.2 per cent month on month in July, grinding house price change further into the negative of -3.8 per cent, according to Nationwide figures.
This time last year, house price change had increased by 14.3 per cent over the previous year, down from an increase of 16.8 per cent in the year to July 2022.
Prime Minister Rishi Sunak speaks with Barratt Developments regional managing director Gary Ennis (hidden) during a visit to Hayes Village, a new housing development under construction by Barratt Homes in Hayes, west London on July 27, 2023.
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Simon Rubinsohn, chief economist at Rics, has said that an uptick in mortgage lenders cutting rates is expected to be short-lived.
He said: “The continued weak reading for the new buyer enquiries metric is indicative of the challenges facing prospective purchasers against a backdrop of economic uncertainty, rising interest rates and a tougher credit environment.”
The chief economist also expects rents to rise sharply as more landlords quit the sector but tenant demand continues to soar.
Rubinsohn said: “Demand shows no signs of letting up, supply remains constrained and that means rents are likely to continue rising sharply despite the cost-of-living crisis.”
An aerial view of terraced housing and blocks of flats in west London, as around one in 50 Londoners were living in temporary accommodation this spring, according to data from the body representing local councils in the capital.
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The number of agents predicting rent prices to rise over the next three months exceeded those anticipating drops by a margin of 63 per cent, which is the largest in any month since Rics’ records began in 1999.
London rent is expected to hit a record average of £2,700 a month next year, according to City Hall analysis of data from Rightmove and Savills.
The National Residential Landlords Association (NRLA) said prices have risen because the demand for rental properties is far outstripping supply.
In Scotland, where the SNP introduced caps on rent rises, the market has seen the most widespread falls in the number of available properties.
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A line of residential property boards in York.
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Sellers are anticipating further falls in the foreseeable future, price cuts are becoming increasingly widespread.
Half of home sellers are being forced to cut asking prices, according to analysis by Hamptons estate agents.
This is the highest level in nine years and comes as house prices fell for the fourth month in a row.
Robert Cooney, of Robert Cooney estate agents in Taunton, told The Telegraph: “Price reductions are now required to effect traction on most properties.”
The largest price falls in the next three months are expected in the South East, Yorkshire and the Humber, and the East Midlands.