UK house prices fall less quickly as pessimism eases, estate agents say

UK house prices are falling less sharply as sales pessimism eases, according to a survey of estate agents which suggests the housing market is stabilizing after the recent rise in mortgage costs.

The Royal Institution of Chartered Surveyors said on Thursday its house price balance sheet, which measures the difference between the percentage of surveyors who see rises and falls in house pricesit rose to minus 39 last month from minus 43 in March.

This is the highest figure in five months, and up from the 14-year low of minus 47 recorded in February.

Respondents to the professional body’s survey were also less pessimistic about future home prices, with year-ahead expectations rising to minus 16 in April from minus 24 in March, and well above minus 61 recorded in November of last year.

The stronger figures came after official data showed on Wednesday that most people in England and Wales in their 20s chose to continue living with their parents, particularly in London, partly due to low housing accessibility.

While noting that most indicators were “rising . . . from its lows towards the end of last year,” RICS said, its results still point to “a market struggling for momentum, with higher borrowing costs and a cautious economic outlook continuing to be the main challenges”.

Agreed sales for April improved to minus 19, the highest level since July last year, but the measure that tracks new buyer demand fell to minus 37 from minus 30 in March and February.

Thursday’s data echoed last week’s figures from mortgage provider Nationwide, which showed house prices increased by 0.5%. between March and April, and the Bank of England said mortgage approvals it hit a five-month high in March.

Borrowing costs have fallen since peaking in autumn last year after then Prime Minister Liz Truss announced £45bn of unfunded tax cuts in her ill-fated ‘mini’ budget, though more remains higher than they were before September 2022.

Mortgages following the BoE’s base rate are likely to rise further as markets expect the central bank to do so raise interest rates to a 15-year high of 4.5%. later Thursday. However, consumers with fixed rate deals are benefiting from easing long-term interest rate expectations.

With many people unable to buy a property, most surveyors told RICS they have seen increased demand for rentals, pushing rental prices well above average levels over the past two decades.

Data released on Wednesday by the Office for National Statistics showed that housing affordability continues to weigh on young people, with more choices to stay and live with their parents, especially in London.

In 2021, more than one in four households in the capital had at least one adult child — defined as someone aged 18 or over 16 and with no education — at home, the highest share of any region in England, according to the ONS.

The agency said housing affordability was a key factor behind the growing trend. Last year London was the least profitable region to purchase property with the average worker spending 12.5 times their annual income on purchases.