UK house prices plunge over last three months with estate agents 'struggling to sell anything'

Estate agents’ predictions for the property market suggest 2023 could be worse than during the pandemic.

A new industry survey reveals that property professionals are pessimistic for the year ahead as agreed sales, house prices and new instructions to sell homes remain on a downward trend for January – the ninth negative monthly reading in a row for new buyer inquiries.

The survey, conducted by the Royal Institution of Chartered Surveyors (RICS), shows 47 per cent of surveyors reported seeing a fall rather than an increase in new buyer inquiries, deteriorating from a balance of 40 per cent who saw this the previous month.

Overall, those surveyed in all parts of the UK saw either a fall in demand or a stagnant trend over the latest survey period, RICS said.

Dominic Lipinski

The feedback suggests that a net balance of 20 per cent expect to see house sales fall rather than rise, marking an improvement compared with a balance of 42 per cent expecting sales to fall in the next 12 months in December.

The survey also pointed to house prices continuing to decline, with a balance of 47 per cent of surveyors observing price falls and particularly sharp declines seen in the East Midlands and the South East.

Chartered surveyor Michael Burkinshaw said: “Recent valuations from leading lenders suggest a 10 per cent drop in asking/sale prices in January compared to November 2022.”

He added: “In January, agents were struggling to sell anything and vendors were agreeing to significant drops.”

Simon Rubinson, chief economist at RICS, said: “Although some respondents to the January RICS survey have noted a little more interest in the housing market as the new year got under way, the overall tone of the feedback still remains subdued, which is not altogether surprising given the jump in mortgage rates since the autumn.

“Prices, meanwhile, are now beginning to reflect the shift in balance between demand and supply.

“However, it is questionable how much downside to pricing there is likely to be given that recent macro forecasts from the Bank of England and others are now envisaging a less harsh economic environment this year.

Victoria Jones

“Meanwhile, the rental market continues to show strong interest from tenants and limited stock available which is keeping a firm momentum to rental growth.”

Elsewhere, house builder Redrow has posted lower sales and profits for the first half after a slump in homebuyer demand, and also warned the market will remain tough in 2023 despite signs of a tentative recovery.

It said 2023 would be “challenging”, but was set to be better than feared after a New Year revival in demand after mortgage rates have abated.

The comments echoed those of Barratt Developments on Wednesday, which flagged a rebound in buyer interest in January.