House price growth hits 15-month low as buyer demand slows

UK house prices rose at their slowest pace in more than a year in June as demand from buyers eased slightly although the overall breadth of price increases remained well above pre-pandemic levels, the latest Royal Institution of Chartered Surveyors’ (RICS) survey shows.

The RICS monthly house price balance – measuring the difference between the percentage of surveyors reporting price rises and those seeing a fall – dropped to +65 in June from a downwardly revised +72 a month earlier.

This was the index’s lowest reading since March 2021, but still well above the series’ long-run average of +13.

Simon Rubinsohn, chief economist for RICS, said: “Pricing across much of the housing market remains resilient for now with a shortage of stock continuing to be a feature highlighted by many respondents to the survey.

“Although buyer enquiries have predictably slipped a little of late, this needs to be placed in the context of the healthy level of demand in previous months.”

RICS said the balance of its members expecting house prices to rise over the next 12 months fell to +37 from +78 in February. Upward pressure on rent, however, was growing.

“A lack of social housing development allied to more onerous changes in the private lettings market is … leaving the rent expectations metric pointing to further strong growth in the midst of the worsening cost of living crisis,” Rubinsohn added.”

Following the release of the RICS’ Residential Market Survey (for June), Tom Bill, head of UK residential research, Knight Frank, commented: “Mortgage offers made on more favourable terms earlier this year will begin to expire in coming months, meaning buyers may have to reassess their plans.

“Combined with economic news that is going to get worse before it gets better, and the fact supply is rebuilding, downwards pressure on house prices will intensify after the summer. In the unlikely event of a general election this year, both activity and price growth would slow further.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Clearly the property market is not immune from a 40-year-high in inflation and five successive increases in interest rates, which RICS confirms is reducing demand.

“However, we are still seeing considerable interest from buyers, particularly in smaller, correctly-priced family houses.

“Increasingly-stretched buyers are beginning to test the resolve of previously-intransigent sellers, which is resulting in some price softening but no major corrections so far.”



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