Market on the turn, as buyers pack up and go home: RICS

Buyer numbers fell for the fifth consecutive month in September. Agents said they expected prices to fall over the next 12 months. Agreed sales fell for the fifth month in a row – and we saw the biggest monthly fall since the market shutdown in May 2020. The average agent has 34 properties on their books.

RICS has released its Residential Market Survey for September: 9._web_-september_2022_rics_uk_residential_market_survey_tp.pdf

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown said: “The market is starting to turn. Buyers are packing up and going home, as mortgage rate rises prove to be the final straw. Prices have been held up by a dearth of properties for sale, but agents are increasingly convinced that they will drop over the coming year.

“House prices are still rising, because buyers still vastly outstrip sellers- the average agent has just 34 properties on its books – but price rises are starting to ease.

“Buyers are getting cold feet, with worries that they might be getting in at the worst possible time – with prices near the top of the market, mortgage rates rocketing, and the cost of running a property rising horribly too. Even if they want to go ahead with a purchase, mortgage lenders may throw a spanner in the works, deciding the loan they need is now out of reach. As one agent suggested in the report, perhaps the party is over.

“Once potential buyers get the sense that the market is turning, the pressures will intensify, because they feel that by sitting tight, they can wait for mortgage rates to ease and prices to drop back. This will feed more price falls, and more people putting off a purchase, creating a vicious circle for the market. The risks are growing that we could see substantial price falls in the coming months.

“For anyone forced back into the rental market to wait it out there’s a double whammy, because the number of prospective tenants continues to climb. As more former buyers and owners swell their ranks, it’s going to mean rents keep rising. Meanwhile, the number of available rental properties has fallen again, as the figures stop stacking up for more buy-to-let landlords. It means more people chasing fewer properties, which never ends well for prospective tenants.”