Property prices in the UK dropped in January after a shift in demand in the market, surveyors have said.
There was a downward trend in agreed sales, house prices and new instructions to sell homes in January, the Royal Institution of Chartered Surveyors said.
According to the expectations of property professionals, this picture is likely to remain in place for a while longer as the market adjusts to higher interest rates, the institute’s report said.
A net balance of 47 per cent of surveyors reported seeing a fall rather than an increase in new buyer inquiries, up from 40 per cent who saw this in December.
January marked the ninth negative monthly reading in a row for new buyer inquiries.
Overall, those surveyed in all parts of the UK saw a fall in demand or a stagnant trend over the latest survey period, the institute said.
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A net balance of 14 per cent of survey contributors also reported a decline in properties coming on the market over January.
Looking at the year ahead, a net balance of 20 per cent expect to see house sales fall rather than rise, marking an improvement compared with 42 per cent who expected sales to fall in the next 12 months in December.
The latest feedback also pointed to house prices continuing to decline, with a balance of 47 per cent of surveyors observing price falls, with particularly sharp declines seen in the East Midlands and the south-east.
And in signs of upwards pressure on rental prices, tenant demand continued to increase, a net balance of 43 per cent of survey contributors said.
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At the same time, landlord instructions continued to fall, the institute said.
"Although some respondents to the January … survey have noted a little more interest in the housing market as the new year got under way, the overall tone of the feedback still remains subdued, which is not altogether surprising given the jump in mortgage rates since the autumn," said Simon Rubinsohn, its chief economist.
“Prices, meanwhile, are now beginning to reflect the shift in balance between demand and supply.
“However, it is questionable how much downside to pricing there is likely to be given that recent macro forecasts from the Bank of England and others are now envisaging a less harsh economic environment this year.
“Meanwhile, the rental market continues to show strong interest from tenants and limited stock available, which is keeping a firm momentum to rental growth.”
The residential market survey is a monthly sentiment survey by the institute of chartered surveyors in the UK’s residential sales and lease markets.
“The best quality, best located properties are still selling well at prices which are not significantly changed over those achieved last year," said a Cambridge estate agent who was quoted in the report.
A property professional in Edinburgh, Scotland, told the survey: “December and January were typically slow.
“The general rhetoric from potential sellers is ‘wait and see’.
“A steady increase in market activity in Edinburgh and the Lothians is anticipated through the spring into the summer.
"Interest rates and cost of living are undoubtedly having an impact.”
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