The rate of house price rises has slowed to the lowest pace since last May as interest rate increases have affected buyer affordability, according to the February UK Housing Market Survey published by the Royal Institution of Chartered Surveyors (RICS).
House prices rose for the sixteenth consecutive month in February, but the pace of increase slowed to the lowest since last May. Just 24.0% more Chartered Surveyors reported a rise than a fall in house prices, down from 28.0 % in January. RICS believes that the three interest rate increases have begun to weigh heavily on buyer affordability, with 19% more Chartered Surveyors reporting a fall than a rise in new buyer enquiries - down from 6% in January.
New instructions to sell property have gone nine months without a rise, the longest stretch in seven years. Households remain under little pressure to sell with the stock of unsold property on surveyors' books falling to the lowest level since July 2004. As a result, the ratio of completed sales compared to the stock of available property on the market rose to 47.0% - the tightest market conditions since June 2004.
Strong house price growth was once again seen in London and the South of England, fuelled by an ever-booming financial services sector, but there are signs of a modest slowdown. In Scotland house prices increased at their fastest pace for several months, while remaining robust in Northern Ireland. However, the picture in other parts of the country is much weaker with small price falls reported in the East Midlands.
RICS spokesperson Ian Perry, said: "The interest rate rises have started to worry would-be buyers with many concerned that they will be unable to meet mortgage repayments. Affordability for many will continue to decrease in the coming months as the January rise, and further rises take effect. Bullish market conditions still prevail in the South East, Scotland and Northern Ireland but this is at the same time that prices have stagnated in the Midlands. Market conditions remain tight but greater awareness of HIPs, in the run-up to their introduction, might push more property onto the market in the coming months increasing choice for the short term."
