House prices across the UK registered the most widespread falls in 13 years in December as buyer demand and sales activity weakened more sharply than expected in the face of higher borrowing costs and the risk of a recession, according to the latest RICS survey.

The RICS house price balance, which measures the difference between the percentage of surveyors seeing rises and falls in house prices, dropped to -42 in December from -26 the previous month.

Property prices are widely expected to fall further in the coming months.

Simon Rubinsohn, chief economist at RICS, said the survey “highlights challenges in the housing market as new buyers grapple with more costly finance terms and uncertainty over the outlook of the economy”.

Property prices dropped across all English regions with East Anglia and the South East reporting the sharpest net balance declines.

Overall in Britain, agreed sales continued to weaken, RICS said, falling to -41. New buyer enquiries fell slightly while the volume of people putting their properties up for sale was the weakest since September 2021.

But while property price falls, RICS said rents are expected to rise owed to the widening supply-demand imbalance in the PRS.

Tom Bill, head of UK residential research at Knight Frank, said: “After September’s mini-Budget, a number of buyers and sellers switched off early for Christmas, which explains December’s drop in activity. However, the last quarter of 2022 doesn’t tell us very much about what will happen this year.

“Buyers and sellers increasingly understand that although mortgage costs are edging down, a new normal of higher rates is emerging that it will soon no longer be possible to blame the Liz Truss government for. Over the next few months we will get a clearer sense of how people react once they recalculate their budgets. This decision-making process rather than what happened in the aftermath of the mini-Budget will set the trajectory for the housing market this year.”