UK Housing Slowdown Starting To Affect Prices

The housing market in the UK is continuing its slow down as a direct consequence of higher interest rates, according to figures released by the Royal Institution of Chartered Surveyors.

The figures suggest that more regional surveyors have experienced a decrease in prices than those that have reported an increase, suggesting that the momentum the housing market garnered in recent years has well and truly come to a halt.

According to previous reports, the Royal Institution of Chartered Surveyors has said this is the first time price drops have overtaken price rises in almost two years.

House prices have soared in recent years off the back of a favourable credit environment and strong economic growth. With income’s rising, demand for homes across the UK shot up in spite of slowing supply, causing house prices to spiral out of control.

However, according to today’s report, prices are only now beginning to slow after the impact of sharp consecutive interest rate rises. As the price of mortgages increase, people are becoming more prudent and borrowing less, thus driving down the price of homes in general.

Despite these figures, most other reports have shown that house price inflation remains well within double-digits in spite of five interest rate rises this year thus far, much to the surprise of most analysts.

The RICS survey measures the difference between the number of surveyors reporting a drop in house prices and those reporting an increase, rather than examining the average price of home sales like other similar reports.

Whilst subjective, analysts take this particular study to be more reflective of actual trends given the localised nature of the findings.

The survey also suggested the number of new home enquiries had fallen over the course of August, down for the ninth consecutive month as the impact of higher rates begin to be felt.

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