South East house prices drop as sales slump

Purchases have fallen for months but October saw a plummet not seen since the financial crash of 2008

‘Activity is likely to slip back over the coming months and realistic pricing is more important to complete sales’

HOUSE prices are falling fastest in the South East and East of England as home sales plummet at the same rate as during the financial crisis.

The share of estate agents reporting a drop in newly agreed home sales in October was the same as in the summer of 2008, according to the Royal Institution of Chartered Surveyors, a professional body. More agents expect house prices and agreed sales to fall over the next 12 months than at any other time since at least 2010.

National house prices started to fall in October for the first time in 28 months, with the most notable drops in the East and South East of England.

Agents have now reported falling sales in 12 out of the last 14 months and for the last seven consecutively, as high mortgage rates bring the pandemic house price boom to a grinding halt.

Buckinghamshire’s Donald Leslie said: “The difference in the market activity between September and October has the hallmarks of a crash following a period of unsustainable growth.”

Simon Rubinsohn, of Rics property forum, said the sharp jump in mortgage costs since the summer means sales will fall further. He said: “The volume of activity is likely to slip back over the coming months and realistic pricing is more important to complete a sale.”

Agents reported a drop in buyer inquiries for the sixth month in a row in October. Demand has not been so low since the spring 2020 lockdown, when home moves were effectively banned.

Rising mortgage rates – which accelerated between June and September and then rocketed at the fastest rate on record after the mini-budget – have drastically cut spending power. They have also hammered buyer sentiment.

Taunton estate agent Robert Cooney said several buyers and sellers cancelled sales after the mini-budget as lenders changed their stress tests and higher mortgage rates changed how much buyers could borrow.

He said: “Best and final offer scenarios are a thing of the past and price reductions are commonplace.”

For the second month in a row, demand fell in every region of the UK.

Inquiries are falling most in Wales, the East of England and the South East.

Andrew Oulsnam, of Robert Oulsnam and Company in Birmingham, said: “The property market has collapsed following the political turmoil and is unlikely to improve now until January.”

James Watts, of Robert Watts estate agents in Yorkshire and the Humber, added: “The market slowed dramatically in October following the minibudget bombshell, but there were signs it was slowing before this.”

Agents reported the biggest drops in newly agreed sales in the North West and East Midlands. In Northern Ireland and Scotland, however, agents are still reporting rising prices – but the pace of growth has cooled. On balance, agents in every region expect prices to decline in the next year

The lettings market, however, is a very different picture. Tenant demand is still rising and agents expect rents will be driven even higher over the next few months.

One of Britain’s biggest housebuilders said it is selling nearly half as many homes as a year ago, blaming high mortgage rates.

Taylor Wimpey said its sales rate fell by almost half for the last five months, compared with the first half of the year.

It added that the number of buyers pulling out before completion had increased by more than 50pc.