Both buyers and sellers sat tight during October leading to a further drop in sales levels, says RICS.
The proportion of surveyors reporting house price falls rather than increases has hit its highest level in six years.
In a survey by the Royal Institution of Chartered Surveyors (RICS), a balance of 10% more estate agents saw declines in property values than those who saw price rises in October, "the weakest reading since September 2012".
There was a further drop in both buyers and sellers, with the number of homes on the market remaining close to record lows, while sales levels were either flat or in decline in 11 of the UK’s 12 regions.
The situation looks unlikely to improve in the near future, with respondents reporting a year-on-year drop in the number of appraisals they were doing.
Going forward, estate agents expect prices to fall further over the coming three months, while they are also doubtful that transaction volumes will pick up.
Why is this happening?
RICS said the weakening in prices was being driven by a lack of demand from potential buyers.
It attributed this to a combination of heightened political uncertainty due to Brexit, ongoing affordability pressures, rising interest rates and a lack of fresh stock coming on to the market.
A balance of 14% of estate agents said they had seen a fall in demand during October, the third consecutive month during which buyer numbers have deteriorated.
Above: Four-bedroom house in Offord Cluny near Cambridge
Who does it affect?
Despite the bleak national picture, RICS said there continued to be considerable regional variation.
What’s the background?
While the market was divided regionally, there were also different dynamics at play according to price bands.
A small majority of estate agents said sales of homes for up to £500,000 had been going through at least level with their asking price, although 34% said transactions were being agreed at discounts of up to 5%.
But sales agreed on properties in the highest price bracket were coming in noticeably below the original asking price.
RICS also reported a bleak outlook for the lettings market, saying the number of properties available to rent had fallen for the 10th consecutive quarter – the longest negative stretch since the series began in 1999.
This decline in supply was met by a rise in demand from potential tenants, which is expected to put further upward pressure on rents.
The latest downbeat assessment of the property market comes after Nationwide Building Society said annual house price growth had slowed to its lowest level for more than five years.
Top 3 takeaways
- A balance of 10% more estate agents saw falls in property values than those who saw price rises in October - "the weakest reading since September 2012"
- There was a further drop in both buyers and sellers, with the number of homes on the market remaining close to record lows
- Sales levels were either flat or declining in 11 of the 12 regions of the UK
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