House price decline showing tentative signs of stabilising - RICS

UK house prices remained under pressure in October, a closely-watched survey showed on Thursday, although the pace of decline appeared to be steadying.

According to the latest RICS UK Residential Market Survey, October’s house prices indicator was -63.

That was a slight improvement on September’s net balance of -67, however, slightly better than consensus for -65. RICS said it suggested that the pace of decline may be starting to steady.

The agreed sales balance was -25, an improvement on September’s -35, while the number of new instructions coming to market was -7.

But looking ahead to sales expectations in the coming months, the balance was little changed at -20. Respondents were more optimistic for the longer term, with the 12-months sales expectations indictor at 0.

Tarrant Parsons, senior economist at the Royal Institution of Chartered Surveyors, said: "Plenty of caution remains evident with respect to both buyer and seller activity across the UK housing market, albeit the latest survey points to a slightly less negative picture than reported over the previous few months.

"Mortgage affordability will remain stretched over the near-term, leaving little prospect of a strong rebound in residential sales volumes, even if expectations have moved away from cyclical lows."

On Tuesday, data from Halifax showed a 1.1% rise in house prices in October, while last week Nationwide reported a 0.9% uptick.

But Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: "The RICS survey casts doubt on the idea that the housing market is over the worst, which has been fuelled by increases in both the Nationwide and Halifax measure of house prices.

"Buyer demand has stayed in the doldrums; the new buyer enquiries balance remained well below its average since 1999. And while it is now consistent with net house purchase mortgage approvals rising to around 50,000 in the coming months, that still is well below its average in the latter half of the 2010s, 66,500.

"We think the jumps in the Nationwide and Halifax measures are just flashes in the pan and the official measure [of house prices] won’t hit bottom until next spring, by which time we think it will have fallen about 6% from its peak."