UK house prices fall as rising mortgage rates temper property market

British house prices fell for the first time in 28 months in October and rising mortgage costs threatened to put further pressure on the property market, a survey showed on Thursday.

The Royal Institution of Chartered Surveyors (RICS) house price balance, which measures the difference between the percentage of surveyors reporting price rises and those seeing a fall, tumbled to -2 in October from +30 in September.

October’s figure was the first negative number following 28 positive monthly readings, indicating that national house price growth was “grinding to a halt,” RICS said.

A measure of expectations for house prices in 12 months’ time slumped to -42 from -18.

The survey shows that enquiries from new buyers fell for the sixth month running and buyer demand was negative across the country for the second month in a row.

Mortgage rates have surged in recent months, gathering speed after former Prime Minister, Liz Truss’s “mini-budget” roiled financial markets. Banks briefly withdrew hundreds of mortgage products.

“The latest feedback to the RICS survey provides further evidence of buyer caution in the face of the sharp rise in mortgage costs.

“As a result, the volume of activity is likely to slip back over the coming months and realistic pricing is now much more important to complete a sale,” Simon Rubinsohn, chief economist at RICS, said.