UK property market weakest since 2010 as uncertainty weighs

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British house prices registered the most widespread falls in 13 years last month as buyer demand and sales activity weakened more sharply than expected in the face of higher borrowing costs and the risk of a recession, a survey showed on Thursday.

The Royal Institution of Chartered Surveyors (RICS) house price balance, which measures the difference between the percentage of surveyors seeing rises and falls in house prices, slumped to -42 in December from -26 the previous month.

December's figure was the lowest since October 2010 and below the -30 that economists had forecast in a Reuters poll.

Looking at the year ahead, the balance for price expectations edged down further from November.

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."

Prices fell 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 dipped marginally while the number of people putting their house up for sale was the weakest since September 2021.

The survey results echoed other signs of house price weakness. Mortgage lenders Halifax and Nationwide have both shown prices falling in monthly terms as inflation and rising interest rates squeeze home-buyers.

A Reuters poll of economists and analysts in November predicted house prices would fall around 5 percent this year having surged by 28 percent since the start of the pandemic in 2020.

In contrast to property price falls, rents are expected to push up, RICS said. Demand in the rental market was set to slow further after sinking to its weakest in nearly two years last month, but fewer landlords were offering properties.

RICS also said sellers were putting a price premium on energy-efficient homes with more than half of respondents stating this was due to better market value retention.

Energy bills in Britain and other countries have soared in recent months, hitting disposable incomes for many households.