As purchasers contend with rising costs of living, demand is down, but a dearth of available properties is projected to keep prices rising.
According to surveyors, home prices continue to rise despite indications of a declining housing market.
The Royal Institution of Chartered Surveyors (RICS) discovered that twenty-five percent of property professionals reported a reduction in new buyer inquiries in July, the third consecutive month of decline.
Since March 2020, when the COVID-19 lockdown began, sales projections for the next 12 months have been the most pessimistic.
Higher interest rates and the cost-of-living crisis were identified as explanations, even though the survey was conducted before the Bank of England raised interest rates by 50 basis points last week, the largest single increase since 1995.
Despite this, house prices continue to rise due to a shortage of available inventory.
63% of surveyors reported price increases in July, a decrease from the 78% reported in April but still well over the long-term average.
The general assumption was that property prices will continue to be higher a year from now.
Tom Bill, head of UK residential research for the real estate firm Knight Frank, stated, “Supply is so low because so many individuals took their first summer vacation in two years.
He said, “Autumn will be the litmus test for the real estate market, and we anticipate annual price growth to decelerate to single digits as supply increases and demand declines.
36% of real estate professionals observed an increase in demand for rental properties, and as new landlord guidelines decrease, rents are projected to soar.
RICS senior economist Tarrant Parsons stated: “Amidst a backdrop of rapidly rising living costs, slower economic growth, and rising interest rates, it is unsurprising that the housing market is currently losing impetus.
“Considering that monetary policy will be tightened more in the coming months, sales forecasts indicate a further decline in transaction volumes in the future.
“However, when it comes to housing pricing, supply constraints are still viewed as a significant market driver. Despite the likelihood that house price growth would continue to moderate, respondents estimate prices will be somewhat higher a year from now.”
