The latest monthly Royal Institution of Chartered Surveyors (Rics) report shows the broadest fall in UK house prices since 2009.
According to Rics, the tighter lending environment continues to weigh heavily upon homebuyer activity.
The Rics survey for July reveals that house inquiries and sales continued to decline and house prices have fallen for a further month.
The Rics survey measures the difference between the percentage of surveyors reporting price rises and falls, it dropped to -53 in July from a downwardly revised -48 for June.
The figure was lower than anticipated and also the lowest reading since April 2009.
The survey also suggested that short-term market expectations remain negative and that rental demand continues to rise in tandem with rental prices.
London estate agent an former Rics chairman Jeremy Leaf says the Rics report bears out to some degree what has been seeing on the ground.
“Activity has been compromised by continuing cost-of-living concerns and interest rates staying higher for longer but there’s now an expectation that both may be at or near their peak.
“As a result, we’re starting to see more determination to buy, but not overpay, particularly from first-time buyers suffering from ever-increasing rents, and a general belief that the extent of the market’s likely decline in some quarters may have been exaggerated.”
MT Finance director Tomer Aboody comments that as affordability becomes even more of a strain due to higher rates, sales are slowing as buyers wait to see what the Bank of England does next and whether mortgage lenders are prepared to become more flexible.
“Interest coverage ratios (ICRs) are causing even greater strains, since rents, although higher than last year, are still not in line to cover the affordability needed to enable landlords to qualify for mortgages. Will banks start taking a view on their 115 to 125% rental coverage to assist?”
He adds: “The next few months will be telling, as we have potentially reached the peak in base rate and it will then be down to what role banks and government assistance plays in bringing back positivity to the market.”
Shawbrook managing director of development finance Terry Woodley believes that as demand becomes subdued, developers are adapting their business models.
“Our research indicates that 39% of developers are diversifying their strategies and focussing on different types of schemes which may include the likes of build-to-rent and houses in multiple occupation (HMOs) to adapt to the lessening demand from buyers”.
The report also says new buyer enquiries have dropped by a whopping 45%. And I’m still seeing nonsense reports about the numbers of FTB’s still buying??