Key facts
- RICS house price balance fell to -32 in September, down from -28 in August.
- RICS members expect property prices to fall over the next three months.
- New buyer enquiries weakened for the first time since March.
- London reported the most negative price balance, while Scotland and Northern Ireland saw rising prices.
- Financial markets anticipate the Bank of England will raise rates in November.
The UK housing market faced renewed downward pressure on house prices in September, with the prospect of higher interest rates weighing on activity, according to the Royal Institution of Chartered Surveyors (RICS).
The RICS house price balance, which measures the difference between the percentage of surveyors reporting price increases and those reporting decreases, fell to -32 last month from -28 in August. This marked the largest monthly decline in four months and was a bigger drop than economists had anticipated.
RICS Head of Market Research Tarrant Parsons stated that a renewed rise in interest rate expectations has created a "fresh headwind for the housing market," leading to increased buyer caution and a loss of momentum in sales activity. The number of new properties listed for sale increased for the first time since the middle of last year.
Looking ahead, RICS members anticipate further property price falls over the next three months, though they expect prices to stabilize over a 12-month horizon. London exhibited the most negative price balance, while Scotland and Northern Ireland reported rising prices.
Financial markets are pricing in a Bank of England rate hike in November, with further increases anticipated in 2027, although earlier forecasts for a string of rate rises proved premature. New buyer enquiries weakened for the first time since March but remain above lows seen shortly after the US-Iran war began.
In the rental market, rising tenant demand and fewer properties from landlords pushed the net balance for rents above its average for the first half of the year, though it was lower than in August. The Office for National Statistics reported a 3.8% annual increase in private-sector rents in August and a 1.4% rise in house prices in the 12 months to July. Mortgage lender Lloyds reported unchanged house prices in September, while Nationwide noted a small, unexpected drop.