The outlook for house prices continues to looks bleak as high mortgage rates weigh on the property market, the latest Royal Institution of Chartered Surveyors (RICS) survey shows.

The RICS Residential Market Survey, which measures the percentage of surveyors that are reporting house price increases versus declines, shows a reading of -68% in August from -55% in July – its lowest level since the financial crisis.

Additionally -47% of respondents noted a decline in agreed sales last month, up from -45% in July, with new sale instructions following a similar trend, dropping from -17 in July to -26 this time round.

Looking ahead, near-term sales expectations remain subdued, although the net balance has turned marginally less negative, at -38%, compared to last month’s reading of -45%. On a 12-month view, the trend in home sales is anticipated to flatten out, evidenced by the net balance moving from -25% in July to -5% in August.

Looking across to the lettings market, conditions remain more positive than the sales market, with a net balance of +47 of survey respondents noting a rise in tenant demand (+59 in July). However, new landlord instructions fell slightly with a reading of -20 (-19 in July).

Given this mismatch between demand and supply, a net balance of +60% of contributors foresee rental prices being driven higher over the coming three months.

RICS chief economist, Simon Rubinsohn, commented: “The latest round of feedback from RICS members continues to point to a sluggish housing market with little sign of any relief in prospect.

“Buyer enquiries remain under pressure against a backdrop of economic uncertainty and the high cost of mortgage finance. Meanwhile, prices are continuing to slip albeit that the relatively modest fall to date needs to be seen in the context of the substantial rise recorded during the pandemic period. Critically, affordability metrics still remain stretched in many parts of the country.

“The other side of the softer demand in the sales market is the continuing strength of rental demand. The yawning gap with rental supply is clearly visible in the RICS Rent Expectations indicator which remains close to an all-time high.

“Anecdotal comments from contributors that landlords are leaving the sector suggests the challenging environment for tenants is unlikely to improve any time soon”.