UK house prices are expected to continue to fall despite surveyors’ expectations that the housing market will stabilise over the next 12 months, a study has shown.
The Royal Institution of Chartered Surveyors’ (Rics) monthly survey, which measures the proportion of surveyors reporting new buyer inquiries against those saying they fell, found the net balance was -29% in March, almost flat on the -30% recorded in February.
Prices continued to drop, with a net balance of -43% of respondents reporting a decline in the latest survey. However, the figure was an improvement on the -47% reported in February, breaking a streak of 10 consecutive months in which the indicator deteriorated.
Analysts said that an expected fall in interest rates later this year could spur a pickup in sales, but that prices were likely to continue to fall.
Agreed sales slipped to -31%, down from -25% in February, and sales are expected to remain under pressure over the next few months, with surveyors returning a net balance of -29%.
The number of new listings coming on to the market fell slightly during March, according to respondents. However, the net balance for sales expectations in 12 months’ time was +1%, which is the first time the metric has been out of negative territory since March 2022.
Near-term house price expectations remain downbeat, with a net balance of -49%, compared with -53% last month.
In the lettings market, tenant demand hit a five-month high. The imbalance between supply and demand means rents will continue to rise, with the net balance for near-term rent expectations rising to +59% from +45%. Surveyors forecast a growth of roughly 4% in rental prices.
Investors expect the Bank of England to continue to raise interest rates at its next meeting in May, but rates could peak later this year. The Bank’s governor, Andrew Bailey, indicated that there was no need to alter the Bank’s approach to setting borrowing costs in Washington on Wednesday.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Sellers can’t afford to get carried away. Things may not be as grim as we’d feared six months ago, but buyer demand has been dropping for the best part of a year, so if you’re going to sell, you need to enter the market with clear-eyed pragmatism.”
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She added: “For those keen to look closely for any signs of optimism, the one piece of good news is that expectations of falling interest rates later in the year have persuaded agents that we could see sales pick up again within the next 12 months – which is the first time in over a year they’ve felt this positive about the future.
“However, it’s the one bright spot in a really tricky market for sellers. It’s why, on balance, it’s difficult to see the market avoid more price drops in the coming months.”
