House Prices Tumbling - two indices in two days show big falls

Two respected price indices have shown capital values tumbling in the housing market. 

This morning’s RICS residential survey shows overall activity continuing to weaken across the sales market, with higher interest rates and a difficult macroeconomic outlook both taking their toll on buyer sentiment. 

For the seventh month in a row, buyer demand continued to fall, with the net balance coming in at minus 38 per cent. 

Whilst this is less negative than the minus 53 per cent reported in the previous month, the market remains in a firmly downward trend with indications that this will continue in the near term.

For agreed sales, a national net balance of minus 35 was reported over this survey period indicating a continued decline in sales activity. Again, this is marginally less negative than the reading of minus 45 per cent posted in October, but this is also the second month in a row that respondents across every UK region reported a decline in agreed sales, demonstrating what RICS says is now a consistently negative picture at the national level.

The survey’s measure of new instructions coming onto the sales market also remains in negative territory, posting a net balance of minus nine per cent at the national level. 

That said, given the drop-off in sales volumes of late, average stock levels on estate agents books ticked up marginally in November (moving from 34 to 35 properties).

Over the coming twelve-months, an aggregate net balance of 61 per cent of contributors foresee a further decline in house prices.

Simon Rubinsohn, RICS chief economist, comments: “The overall tone of the latest RICS survey is understandably more downbeat than previously, reflecting the uncertain macro environment and the higher cost of mortgage finance. However, anecdotal comments from respondents capture the very real significant divergences in market behaviour at a more localised level.

“Although the headline price balance recorded two consecutive modest monthly falls in prices, and the forward-looking series indicate that this trend will extend through the coming months, the likely 'job-rich' recession suggests the downturn in the housing market this time could be shallower compared with past experiences.”

However, the RICS survey comes hot on the heels of another market snapshot showing landlords’ capital values to have fallen as the sales market flounders.

The Halifax says house prices have fallen by almost £7,000 in one month as property values fell for the third month in a row in November, dropping 2.3 per cent according to mortgage lender Halifax.

The monthly drop in house prices was the biggest since October 2008, in the midst of the financial crisis. It was also the third-largest drop since Halifax records started in 1983.

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