House prices fall for third consecutive month as mortgage costs keep buyers away

house prices Estate agents' boards are seen in south London, Tuesday Feb. 17, 2009. British homeowners are returning to the property market looking to pick up bargains following recent house price falls, research showed Tuesday. (AP Photo/Matt Dunham)
A downward trend in house prices gained further momentum towards the end of 2022. Photo: Matt Dunham/AP

UK house prices fell for the third month in a row in December according to surveyors, with a decline in both the number of fresh properties listings coming onto the market and overall agreed sales.

A net balance of 42% of professionals across the UK reported seeing a decline in prices, rather than an increase, according to the December 2022, survey from the Royal Institution of Chartered Surveyors (Rics).

All regions across England are recording prices softening to some degree, with feedback pointing to East Anglia and the South East seeing the sharpest rates of decline, according to the survey.

The number of fresh property listings coming onto the sales market also fell and there was an overall decline in agreed sales.

Rics said that prospective home-buyers were being put off by higher mortgage costs and the cost of living crisis.

“The latest Rics residential survey highlights the emerging challenges in the housing market as new buyers grapple with more costly finance terms and uncertainty over the outlook for the economy,” Simon Rubinsohn, Rics chief economist said.

Read more: Over 1.4 million households facing mortgage hike

“Meanwhile, feedback around the lettings market once again demonstrates the need for some concerted thinking about how to create a thriving sector that caters for both the private and ‘affordable’ renter,” he added.

Within the negative UK-wide figure, the house price readings across Scotland and Northern Ireland are still marginally in positive territory, albeit a significant turnaround compared with the strong growth reported six months ago, the survey showed.

The December survey also asked if property professionals are seeing more interest from buyers in homes that are more energy efficient.

Around 40% of those surveyed answered yes, but this was outweighed by 60% who did not see this trend, Rics said.

However, 61% of survey contributors stated that highly energy efficient homes were holding their value.

Looking at the lettings market, tenant demand increased over December according to a net balance of 28% of contributors.

However, this was the lowest reading since February 2021, and suggests that the pace of demand growth is slowing across the rental market.

Read more: Lending for house purchase mortgages to drop 23% amid rising interest rates

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “The house isn’t winning any more, with prices down for the third consecutive month. The trend is gathering pace, as more agents say prices are falling with each passing month, and every region is seeing price drops. The picture looks particularly bleak in East Anglia and the South East, where prices are dropping most sharply.

“There is one spark of hope. Fixed mortgage rates are on their way down, which could be enough to persuade some buyers back into the market. However, the pressure from higher prices is likely to keep huge numbers of them away. Inflation may be past the peak, but it’s inching downwards at a glacial pace, so prices will continue to rise at quite a lick.

"With the Energy Price Guarantee going up by another £500 in April – and the government’s universal lump sums halting at the same time – prospective buyers are going to find their finances stretched even further.”

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