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UK property demand declines as house prices in England fall

Surveyors have reported that property sales and house prices continued to decline across the UK in January, while new buyer demand and fresh listings were also down.

A net balance of -47% for new buyer inquiries was reported, down from -40% in December, according to the latest monthly snapshot from the Royal Institution of Chartered Surveyors (Rics). It was the weakest monthly reading since April 2009 and the ninth successive negative monthly reading for new buyer inquiries.

Rics said all the indicators point to a further slowdown in the housing market in the coming months, as borrowing costs have risen sharply and the cost of living crisis squeezes household incomes. The Bank of England raised interest rates for the 10th time last week to 4% but said inflation is “likely to have peaked”, and a recession would be less severe than previously feared.

The Rics survey measures the difference between the number of estate agents and property surveyors reporting increases and those experiencing decreases in different areas of the property market.

According to the survey, the volume of fresh listings coming onto the market was also down, with a net balance of -14% of respondents reporting declining new instructions during January.

Meanwhile, the latest feedback on national house prices points to another monthly decline, as the net balance weakened further to -47% compared with a reading of -42% in December.

All regions of England are currently seeing house prices retreat, with the sharpest drops reported across the east Midlands and the southeast.

Charlie Barrett of DM Hall Chartered Surveyors in Edinburgh told the survey: “December and January were typically slow. The general rhetoric from potential sellers is ‘wait and see’. A steady increase in market activity in Edinburgh and the Lothians is anticipated through the spring into the summer. Interest rates and cost of living are undoubtedly having an impact.”

But despite the broadly gloomy feedback, there appear to be more positive noises coming from the sector about the coming year. While remaining in negative territory, the sales outlook for the next 12 months has halved to -20% from -42% in December.

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