New buyer enquiries decline as interest rate rises start to bite

New buyer enquires declined at their fastest pace since August 2004, with stock of unsold property on surveyors’ books increasing to the highest level since January 2007, according to the latest Royal Institution of Chartered Surveyors (RICS) UK housing market survey.

House prices rose for the 21st consecutive month in July, but the rate of growth remained wedged well below the survey’s long run average of 21.6% for the second consecutive month. 12.6% more Chartered Surveyors reported a rise than a fall in house prices, up from 10.6% in June.

In England, the London juggernaut continued to outperform all other regions with the strongest price rises. Elsewhere, Northern Ireland maintained its impressive run, but price growth in the Scottish market almost halved.

The ratio of completed sales to the stock of available property on the market fell for the fourth consecutive month but remained inline with the survey’s long run average of 37%. Completed property sales for the quarter to July fell to 23.5 per surveyor, down from 24.4 in June.

Surveyor confidence in sales turned negative for the first time since March 2003 as buyers responded to market conditions and a possible sixth interest rate rise.

RICS spokesman, Jeremy Leaf, said: “The combination of softening demand and supply is causing market conditions to weaken further. Buyer activity has pulled back a little over fears that we may have seen the top of the market. With interest rates perched at 5.75% and a jump to 6% a strong possibility, aspiring first-time-buyers are continuing to rent until the market trend becomes clearer.”