UK House Prices Expected to Fall as Market Activity Slows

House prices in the UK are expected to fall in the coming months as the housing market continues to lose steam, says a new survey from the Royal Institution of Chartered Surveyors (RICS).

According to the survey, more estate agents think prices will go down rather than up over the next three months. At the same time, the number of homes being sold is likely to stay about the same, showing that demand from buyers remains weak.

What Can Investors Expect for the Year Ahead?

House prices are still expected to record modest growth over the next 12 months, but optimism has weakened compared to previous months. This drop in confidence reflects slower buyer demand and broader concerns about the economy.

In August, demand fell noticeably. In August, new buyer enquiries fell noticeably. A net 17% of surveyors reported lower buyer interest (meaning 17% more saw a decrease in enquiries than an increase). This shows a slowdown that is more than twice as sharp as the drop recorded in July.

At the same time, supply began to contract. For the first time in over a year, more surveyors (a net balance of 3%) reported fewer new listings coming onto the market.

UK House Prices: Regional Breakdown

The survey highlighted regional differences across the country. East Anglia and the South West saw the most pronounced price falls, while Northern Ireland continued to buck the national trend with upward pressure on values.

Sales activity weakened further, with a net balance of 24% of those surveyed by RICS noting a fall in agreed sales, compared with 17% the previous month. A net balance of 19% also reported falling house prices rather than increases.

Lettings Market Stays Strong

While sales have slowed, the lettings sector remains stronger. RICS reported that rental growth expectations remain resilient, with rents projected to rise by around 3% over the next year.

Industry analysts say that uncertainty around the economy, high inflation, and questions over the path of interest rates are weighing on the housing market. These pressures are likely to keep sales activity muted in the short term while maintaining upward pressure on rents.

Conclusion

The UK housing market is showing signs of cooling, with house prices expected to fall in the short term and buyer demand remaining subdued. Regional variations highlight that some areas are more affected than others, while the lettings market continues to show resilience with steady rental growth.