According to experts, real estate prices fell in August at the fastest rate since 2009.
However, the Royal Institution of Chartered Surveyors (Rics) added that rents in the rental sector were being driven up by a “yawning gap” between demand and supply.
According to Rics, which highlighted the impact of high mortgage rates, a total of 68% of property professionals said house prices were falling rather than rising, marking the most negative reading since 2009.
New buyer inquiries also continued to decline over the month, with 47% of professionals reporting new inquiries seeing their net balance decline rather than increase, down from the 45% balance the previous month.
New sales instructions also fell, as did re-arranged sales, Rics said.
The downside of the weaker demand on the sales market is that rental demand remains strong. The yawning gap in rental supply is clearly visible in the Rics indicator for rental expectations
A net balance of 47% of respondents said sales fell rather than rose, marking the weakest reading since the height of the coronavirus pandemic.
Looking ahead, near-term sales expectations remain subdued, the report continued.
In contrast to the home sales market, renter demand for rental properties remained strong in August, with 47% of professionals reporting an increase.
In a sign of an imbalance between supply and demand, orders from new landlords fell, with 20% of tradespeople reporting a decline.
Given this discrepancy, a net 60% of contributors expect rental prices to rise in the next three months, Rics said.
Rics chief economist Simon Rubinsohn said: “Recent feedback from Rics members continues to point to a sluggish property market with little sign of easing.”
“Buyer inquiries remain under pressure amid economic uncertainty and high mortgage finance costs.
In many parts of the country, affordability metrics remain high
“In the meantime, prices continue to fall, although the relatively moderate decline so far must be seen in the context of the significant increase during the pandemic. Crucially, affordability metrics are still inflated in many parts of the country.
“The downside of the weaker demand on the sales market is that rental demand remains strong.
“The yawning rental supply gap is clearly visible in the Rics rent expectations indicator, which remains close to an all-time high.
“Anecdotal comments from contributors about landlords leaving the sector suggest that the difficult environment for tenants is unlikely to improve any time soon.”
The research, published as a separate report by property website Zoopla, found that rent affordability – the proportion of gross income needed to cover the average rent – has reached its lowest level in a decade at 28.4%.
The rental housing sector is stuck in a seemingly endless cycle of low supply and high demand… More renters looking to share could well support rental growth through 2024, with no end in sight to the rental housing shortage
This compares to an average of 27.2% over the last decade and is as new let rents continue to grow faster than wage growth in the UK, the website says.
According to Zoopla, annual rental costs are on average £2,772 higher than three years ago.
Managing director Richard Donnell said: “The rental sector is stuck in a seemingly endless cycle of low supply and high demand… More renters looking to share could well support rental growth through 2024, with no end in sight to the rental housing shortage.” ”
https://www.standard.co.uk/business/money/house-prices-declined-at-fastest-rate-since-2009-in-august-surveyors-b1106896.html Real estate prices fell more sharply in August than at any time since 2009, according to experts