Property market is ‘facing worse downturn than in Covid crisis’

ESTATE agents are more pessimistic about the outlook for the property market than they were during the depth of the pandemic, a new industry survey reveals.

A higher proportion of agents expect house prices to fall this year than did during the 2020 housing market shut down, according to the Royal Institution of Chartered Surveyors (RICS). The share of estate agents who think house prices will fall over the next year is now bigger than at any point since October 2010, excluding the highs recorded over the previous three months.

It means property experts are the most pessimistic they have been since the aftermath of the global financial crisis.

The downbeat sentiment came as buyer inquiries fell for the ninth month in a row as high borrowing costs and the cost of living crisis hit affordability, RICS said.

Michael Burkinshaw, of Skysuruk chartered surveyors in Bristol, said: “Recent valuations from leading lenders suggest a 10pc drop in asking/sale prices in January compared to November 2022.”

He added: “In January, agents were struggling to sell anything and vendors were agreeing to significant drops.”

Separately, Britain’s biggest housebuilder warned of a “marked slowdown” in the property market.

Barratt Developments said consumer confidence had weakened significantly during the second half of 2022.

The FTSE 100 housebuilder cut its half-year dividend by 9pc yesterday and said it would reduce operating costs if sales fail to improve over the coming months.

However, David Thomas, chief executive of Barratt Developments, said there were signs that the market could be turning a corner as mortgage rates start to fall back from the highs seen at the end of last year.

He said: “Affordability is the biggest headwind currently. After the minibudget last year, affordability was driven off the cliff. However, if mortgage rates continue to drop, house prices fall and salaries rise, we may see improved affordability.”

Barratt Developments said that weekly reservation levels last month were still substantially lower at around 45pc down from a year earlier – but less severe than the 60pc to 65pc tumble recorded in the three months to December 2022.

The more upbeat tone drove a rally in housebuilders’ shares yesterday, with Barratt Developments, Persimmon, Berkeley and Taylor Wimpey all experiencing a jump.