Survey: UK house prices are expected to fall over the coming months

House prices are expected to fall over the coming months as rumours of tax changes in the Budget cause would-be buyers to get cold feet. That is according to the latest closely-watched survey by The Royal Institution of Chartered Surveyors, which asks its estate agent and surveyor members what they are seeing on the ground. More members reported house prices falling in their areas in August than those that reported prices rising.

In East Anglia and the South West of England, the vast majority of Rics members were reporting falls. And going forward, more Rics members across the country see prices falling over the next three months than those who see prices rising. Over a 12 month time horizon, the consensus is that house prices will rise marginally – though the reading was the most negative Rics members have been since December 2023.

Much of the negativity is thought to stem from rumours in recent weeks that Labour could seek to make sweeping changes to property taxes in the Autumn Budget. Rics members are saying this uncertainty is already leading to a slowdown in the market, which could last until the Budget is delivered in late November. Neil Foster, a Rics member in Hexham in Northumberland said: ‘Many selling agents are rolling out the annual excuse of the holiday season for sluggish activity, but there is a real sense that the market is cooling and unlikely to breathe signs of recovery until after the Budget.

‘More pain for homeowners from the Chancellor could precipitate even weaker demand.’ James Brown, a Rics member in Richmond in North Yorkshire added: ‘Now that the Autumn Budget has been announced for late November and with media speculation about possible changes to stamp duty and capital gains, I can’t see the market picking up into the autumn.’ Brian John Boys, a Rics member in Bacup, Lancashire said another key factor behind the sales slump is a breakdown in property chains, with people getting cold feet and pulling out at the last minute.

Mortgage rates are also back on the rise again. HSBC, Halifax, Nationwide Building Society and most recently Santander have all announced rate increases in the past week. Fixed rate mortgage pricing is most heavily influenced by where money markets expect interest rates to head in the future. After entering a historic deadlock on the most recent decision, the Bank of England is expected not to cut interest rates again this year, with the next cut coming as far away as next Spring.

All this is dampening the mood across the property market – and it seems to be impacting almost every region. Rics members also reported a drop off in enquiries from would-be home buyers in August for the second month in a row. In parallel to this, agreed sales also appeared to fall at a sharper rate than that the previous month. Looking ahead, sales activity is anticipated to remain broadly flat over the coming 12 months.

Brian John Boys, a Rics member in Bacup, Lancashire said another key factor behind the sales slump is a breakdown in property chains, with people getting cold feet and pulling out at the last minute. Eliana Davis, a Rics member in Bristol says buyer confidence in the city is low and there are an increased number of properties currently for sale while each transaction is subject to renegotiations and is taking far too long.

Andrew Clive Major Oulsnam, a Rics member in Birmingham says the market has hardened across the city in August with fewer houses coming to the market and fewer sales. Meanwhile, John Frost, a Rics member in Staines blames a flood of flats on the market for the downturn. ‘The large volume of flats and apartments available is pushing prices down and making it hard to secure sales,’ he said.