House prices in Britain fell for the first time in 28 months in October and rising mortgage costs threatened to put further pressure on the property market, a survey showed. The Royal Institution of Chartered Surveyors (RICS), which measures the difference between the percentage of surveyors reporting price rises and those seeing a fall, tumbled to -2 in October from +30 in September. October's figure was the first negative number following 28 positive monthly readings, indicating that national house price growth was "grinding to a halt", RICS said.
A measure of expectations for house prices in 12 months' time slumped to -42 from -18. The survey showed enquiries from new buyers fell for the sixth month running and buyer demand was negative across the country for the second month in a row. Mortgage rates have surged in recent months, gathering speed after former prime minister Liz Truss's "mini-budget" roiled financial markets. Banks briefly withdrew hundreds of mortgage products. While economists expect that a recent settling down in financial markets could provide some relief, it might be premature to assume lending rates will fall, Rubinsohn added.
The average time to complete home sales increased to almost 18 weeks, up from around 16 weeks a year ago. The lettings market picked up in October as tenant demand rose with more people looking to rent. But tenants face additional concerns: survey respondents expected rents to rise by around 4% in the coming 12 months.
A separate survey showed consumer confidence - which is closely linked to the health of the housing market - fell for the third month in a row in October. Confidence fell by 3 points to 94.7, the lowest since April 2020, early in the coronavirus pandemic, and the fourth-lowest score since records started a decade ago, polling firm YouGov and the Centre for Economics and Business Research said.