UK housing market gloom continues amid high rates, surveys show

A man walks past an estate agent in Manchester, Britain on May 14, 2020. (Photo by Jon Super/Xinhua)

In January, prices on the UK's housing market fell most markedly since April 2009 amid elevated mortgage rates.

LONDON, Feb. 9 (Xinhua) -- House prices declined in the United Kingdom (UK) in January as the country's housing market continued to suffer from high mortgage rates and squeezed real incomes, surveys revealed.

In January, prices on the UK's housing market fell most markedly since April 2009 amid elevated mortgage rates, a survey published by the Royal Institution of Chartered Surveyors (RICS) showed on Thursday.

Buyer feedback on national house prices points to another monthly decline, with the January net balance, which is the proportion of respondents reporting a rise in prices minus those reporting a fall, softening further to minus 47 percent compared to minus 42 percent in December, according to the survey.

"Although some respondents to the January RICS survey have noted a little more interest in the housing market as the new year got underway, the overall tone of the feedback still remains subdued, which is not altogether surprising given the jump in mortgage rates since the autumn," said Simon Rubinsohn, RICS chief economist.

For Sale and To Let signs are seen in Manchester, Britain on May 14, 2020. (Photo by Jon Super/Xinhua)

Mortgage rates were still over three times higher than they were a year ago, pricing many out of the market, while many more potential buyers would fail lenders' affordability tests, which had become tougher to pass since the central bank has hiked the bank rate, said Gabriella Dickens, economist at Pantheon Macroeconomics consultancy.

At the same time, households' real disposable incomes would be squeezed further in the second quarter by the watering down of government support for energy bills, Dickens added.

Earlier this month, a report published by mortgage provider Nationwide Building Society also showed that annual house price growth slowed to 1.1 percent in January from 2.8 percent in December.

Month-on-month, January saw a further price fall of 0.6 percent, which left prices 3.2 percent lower than their August peak after taking account of seasonal effects. The monthly decline was the fourth in a row, marking the longest period of consecutive falls since 2009.

"Nationwide's data show that house prices are continuing to buckle under the pressure of elevated mortgage rates, squeezed real incomes and weakened consumer confidence," Dickens said.

Photo taken on Sept. 2, 2020 shows estate agency signs in Reading, Britain. (Photo by Tim Ireland/Xinhua)

A report published by mortgage lender Halifax on Tuesday also showed the market gloom. The annual rate of house price growth slowed to 1.9 percent in January, the lowest level recorded over the last three years, down from 2.1 percent in December.

"We expected that the squeeze on household incomes from the rising cost of living and higher interest rates would lead to a slower housing market, particularly compared to the rapid growth of recent years," said Kim Kinnaird, director at Halifax Mortgages.

"As we move through 2023, that trend is likely to continue as higher borrowing costs lead to reduced demand," Kinnaird added.