RICS: January was deathly for housing market, as prices continued to fade

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, comments on the publication of the latest RICS UK Residential Survey, showing January was deathly for housing market, as prices continued to fade.

Key points from publication:
    • House prices fell again in January. Every region saw price falls – with the worst in the East Midlands and South East.
    • The number of buyers and sellers dropped in January, along with agreed sales.
    • Landlords continued to sell up, while the number of tenants rose again
Sarah Coles says:

“January was deathly for the property market. Despite falling mortgage rates, buyers and sellers gave up the ghost, with buyer numbers continuing to fade for the 9th month in a row.

“Meanwhile, house prices declined for the fourth consecutive month – and the proportion of agents reporting house price falls rose again.

“The RICS report is different from other indices, because it measures the price of homes among sales being agreed that month – so there’s not the usual lag for three months or more while we wait for these to translate into  property completions.

“RICS first noted price drops in its October report, which are likely to be reflected in the January or February figures from the ONS.

“The most recent RICS data indicates that we can expect a steady flow of bad news about house prices well into the spring.

“Estate agents aren’t convinced the picture will change in a hurry. They expect the market to stay quiet and for prices to keep declining, as buyers get to grips with higher mortgage rates and the prospect of a falling market.

“However, the degree of pessimism appears to be easing slightly. Since the horrors unleashed by the mini-Budget, the reversal of an awful lot of measures means the market is forecasting lower rates than it was. As a result, fixed rate mortgages have been getting cheaper.

“The most competitive five-year fix is now below 4% for the first time since October. Meanwhile, the Bank of England is forecasting that any coming recession could be shallower and shorter than had been expected – and we’ve had the first forecast that it may not materialise at all.

“Agents are increasingly hopeful that a combination of the two could persuade buyers to return.

“There’s always the risk that this optimism is misplaced. It remains to be seen much damage has been done to buyer confidence during the past few months, and how the health of the market will hold up if the official figures feed us a monthly dose of misery.”

Renters:

“There was more bad news for renters – as landlords continued to sell up and leave the market – for the 10th consecutive month.

“Some have decided to cash in while property prices are higher, others are getting out of the business because rising mortgage rates means they can no longer make the sums add up.

“They’re also being pushed out by punishing tax rules and tougher landlord legislation – both of which mean higher costs.

“Tenant numbers are still rising, which means more people chasing fewer properties, and pushing rents up. According to Rightmove, in December the average rent for a newly listed property reached a record high outside London of £1,172 a month – up almost 10% in a year. Londoners meanwhile saw average rents hit £2,480. It has predicted rents will rise another 5% this year too.

“It means that if you’re moving properties, there may be little scope for negotiation, because there are an average of six people competing for each home.

“If you’re staying put, meanwhile, and your landlord increases the rent when your fixed-term tenancy comes to an end, it’s worth talking to them and seeing whether you can agree a lower rent.

“They may be hamstrung by rising costs, but they may feel it’s worth taking a lower rent from tenants that have proven reliable rather than going through the hassle and expense of finding someone new.”

 

Kindly shared by Hargreaves Lansdown

Main article photo courtesy of Pixabay