UK house prices showing most widespread falls since 2009

Surveyors last month reported the most widespread fall in UK house prices since 2009, as surging mortgage rates continued to squeeze buyer demand, according to a closely watched survey.

The Royal Institution of Chartered Surveyors’ house price balance fell to minus 47 in January, down from minus 42 in the previous month. The index, which tracks the share of surveyors reporting an increase or drop in prices, registered the 10th successive month of declines and hit the lowest level since April 2009, when the financial crisis had pushed the economy into recession.

The professional body’s new buyer inquiries index fell for the ninth month in a row to minus 47 per cent in January from minus 40 per cent the previous month.

“The overall tone of the feedback still remains subdued, which is not altogether surprising given the jump in mortgage rates since the autumn,” said Simon Rubinsohn, chief economist at Rics.

The average mortgage rate for new loans rose to 3.67 per cent in December, the highest in a decade, according to Bank of England data published last week.

Mortgage rates follow medium-term expectations of the BoE’s policy on interest rates. Last week, the central bank increased interest rates by half a percentage point to a 15-year high of 4 per cent, but suggested they may have peaked.

The latest BoE data showed that in December mortgage approvals fell to their lowest level since January 2009, excluding the height of the Covid-19 pandemic.

The Rics survey’s findings are in line with data from mortgage provider Nationwide from earlier this month, showing that UK house prices fell for the fifth consecutive month in January, marking the longest decline since the 2008-09 financial crisis.

According to Rics survey respondents, house prices retreated across all English regions, with the index showing the sharpest fall in the net balance in the East Midlands and the South East. Across the country, agreed sales continued to weaken, with the net balance coming in at minus 39 per cent in January.

For the year ahead, the sales outlook appeared to improve, with the net balance moving to minus 20 per cent from minus 42 per cent in December.

Demand for rented accommodation continued to rise in January, according to a net balance of 43 per cent of respondents. “The rental market continues to show strong interest from tenants and limited stock available, which is keeping a firm momentum to rental growth,” said Rubinsohn.