UK house prices falling less rapidly as pessimism eases, say estate agents

UK house prices are falling less sharply as sales pessimism eases, according to a survey of estate agents that suggests the property market is stabilising following the recent surge in mortgage costs.

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

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

Respondents to the professional body’s poll were also less pessimistic about future house prices, with expectations for the year ahead rising to minus 16 in April from minus 24 in March, and well above the minus 61 posted in November last year.

The stronger figures came after official data showed on Wednesday that most people in England and Wales in their early 20s were opting to continue living with their parents, particularly in London, in part because of poor housing affordability.

While noting that most indicators had “edged up . . . from the lows hit towards the end of last year”, RICS said its findings still pointed to “a market struggling for momentum, with higher borrowing costs and a cautious economic outlook still the main challenges”.

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

Thursday’s data echoes figures last week from mortgage provider Nationwide, which showed house prices rose 0.5 per cent between March and April, and the Bank of England, which said mortgage approvals hit a five-month high in March.

Borrowing costs have eased since reaching a peak in autumn last year, after then prime minister Liz Truss announced £45bn in unfunded tax cuts in her ill-fated “mini” Budget, although they remain higher than they were before September 2022.

Mortgages that track the BoE’s base rate are likely to increase further as markets expect the central bank to raise interest rates to a 15-year high of 4.5 per cent later on Thursday. However, consumers on fixed-rate deals are benefiting from easing longer-term interest rate expectations.

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

Data released by the Office for National Statistics on Wednesday showed housing affordability continuing to weigh on young people, with more choosing to stay living with their parents, especially in London.

In 2021, more than one in four families in the capital had at least one adult child — defined as someone aged over 18, or over 16 and not in education — in the home, the largest proportion of any region in England, according to the ONS.

The agency said housing affordability was a key factor behind the growing trend. London was the least affordable region for buying a property last year, with an average worker spending 12.5 times their annual earnings on the purchase.