Homebuyer enquiries and property sales dipped further in September. Only Wales and the south west saw an increase in sales, according to the latest RICS report.
What’s the latest?
The housing market lost further momentum in September as the mounting prospect of an interest rate hike spooked potential buyers.
Estate agents reported a fall in buyer inquiries for the sixth month in a row, with sentiment hitting its lowest level since the EU referendum.
The number of sales agreed also dipped, with London and the south east hardest hit, and only Wales and the south west seeing a rise in transactions.
House prices held steady, but activity is not expected to pick up in the coming three months and more estate agents expect property values to fall than to rise going forward, according to the Royal Institution of Chartered Surveyors (RICS).
Why is this happening?
The property market has been stuck in the doldrums for some time due to a combination of political and economic uncertainty, stretched affordability and a shortage of homes for sale.
The Bank of England’s Monetary Policy Committee signalled in September that interest rates could rise in the coming months due to higher inflation, with some commentators predicting the hike could come as early as November.
Who does it affect?
The shortage of homes for sale is deterring existing owners from trading up the property ladder, which in turn means fewer starter homes are being made available for first-time buyers.
Sounds interesting, What’s the background?
While the national picture remained one of subdued activity, there continued to be significant regional variations.
Prices in London continued to fall, while more estate agents in the south east, East Anglia and north east also reporting a drop in values than those who saw a rise.
But across other areas of the country, house prices continued to rise in September.
Looking ahead, activity is set to remain flat at a national level in the coming year, but estate agents in Wales, Scotland and Northern Ireland are optimistic that sales will pick up.
Simon Rubinsohn, RICS chief economist, said: “It was always questionable to talk about the housing market as a single entity but the stark divergence in key readings from the latest RICS survey demonstrates in the clearest possible terms just how important the regional narrative is at the present time.”
He added that the divergence was partly a reflection of affordability constraints hitting areas where prices were higher and partly a shift in economic momentum in the face of the increasing possibility of an interest rate rise.
Top 3 takeaways
- The housing market lost further momentum in September as talk of an interest rate hike spooked potential buyers
- Estate agents reported a fall in buyer inquiries for the sixth month in a row, with sentiment hitting its lowest level since the EU referendum
- The number of sales agreed also dipped, with London and the south east hardest hit
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