UK Housing Demand is Declining at its Highest Rate Since the 2020 Lockdown

According to a survey, the demand for homes in the UK decreased in October at the quickest rate since the Covid-19 outbreak began and experienced one of the worst decreases in more than 20 years, as mortgage rates increased. 

The new buyer enquiries index for the sales market published on Thursday by the Royal Institution of Chartered Surveyors decreased for a sixth consecutive month, from minus 36% in September to minus 55% in October. With the exception of spring 2020, when the housing market was virtually shut down due to pandemic-related measures, that is the lowest reading since the 2008 financial crisis.

Additionally, it was the fifth-largest decline in the index since records have been kept in 1999. Buyer demand was negative in every region of the nation. The index measures the proportion of surveyors reporting a rise in demand minus the proportion reporting a contraction. The statistics, according to RICS Chief Economist Simon Rubinsohn, “further evidence of buyer caution in the face of the sharp rise in mortgage costs”. 

Data released last month by mortgage lenders Nationwide and Halifax revealed that the month-over-month decline in property prices began in October. According to real estate company Savills, home prices in the UK will drop by 10% in 2019.

This prediction is in line with the RICS’s index for anticipated home price growth for the coming year, which dropped to minus 42 in October from minus 18 in September, the lowest level since April 2020. According to RICS, prices are declining despite, that the supply of houses per surveyor has reached an all-time low.

The lettings market remained strong despite more individuals being unable to purchase a home; according to the poll, the net balance for tenant demand in October was a respectable 46%. Landlord instructions decreased to a net balance of minus 14% at the same time, which led surveyors to predict a significant increase in rents in the near future.