The UK’s previously red-hot housing market has cooled in recent months, with various reports signalling that things are softening.
UK house prices rose last month at their slowest pace since early in the coronavirus crisis and they look on course to fall as a surge in mortgage costs adds to uncertainty about the economy for homebuyers.

According to the latest RICS survey released yesterday, enquiries by new buyers fell for a fifth month in row and expectations for the year ahead suggested a drop in prices.

The RICS house price balance – measuring the difference between the percentage of surveyors reporting price rises and those seeing a fall – fell sharply to +32 in September from +51 in August, signalling a slowdown in price growth.

RICS’s chief economist Simon Rubinsohn pointed out that even though the headline price balance remains in positive territory for now, it is clear that ‘storm clouds’ are visible in the deterioration of near-term expectations for both pricing and sales. However, several estate agents report that there have not yet been any real signs of a slowdown in activity levels.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, noted that the RICS survey has always been regarded as one of the most accurate, “not least because data is collected from surveyors and agents ‘at the sharp end just before release”.

He said: “New buyers are pausing for breath while considering the pace and size of future interest rate hikes, so activity has reduced. Like us, many are waiting to see whether worries about mortgage repayments rising more quickly than expected outweigh benefits from cuts in stamp duty and other taxes – particularly for first-time buyers.

“Risks of a correction are greater but the market has proved its resilience repeatedly in the recent past. We’re told more borrowers have higher loan-to-value mortgage debt than in the last financial crisis of 2008 but we’re not seeing signs of a major correction in our offices yet.”

Jean Jameson, chief sales officer at Foxtons, says that his firm is also seeing activity levels and house values “hold up well”, underpinned by tight supply in the London property market.

He commented: “We have seen continued strong demand through September in our offices, with new buyer enquiries up 4% compared to the same period last year, and new sales agreed up 7% on the same period last year.

“As we move towards year end, uncertainty in the economy and a rapidly changing mortgage market may affect buyer inquiries and new instructions across the industry and the UK, as people take more time to decide whether or not to move. Often the sales market does tend to be slower to react, and London tends to be further insulated from the wider UK market by its international appeal and limited stock.”

Winkworth is another company that has this week reported that the housing market has so far remained broadly unaffected by the recent economic turbulence.

“We have not as yet witnessed a negative impact from the mini-budget on applications and sales and, although higher mortgage rates are likely to put a cap on further price appreciation, we anticipate that an increased supply of properties and persistent strong demand will support transactions for the rest of the current year,” the company said in a statement.

Home sales and applications remain unaffected by mini-Budget – for now, says Winkworth