House hunter inquiries, sales and property prices slipped back further in June as mortgage rates increased, according to surveyors.
But the upward pressure on rental prices continues as demand from renters rises but instructions from landlords fall, according to the report from the Royal Institution of Chartered Surveyors (Rics).
An overall net balance of 45 per cent of property professionals reported buyer inquiries falling rather than rising, deteriorating from a balance of 20 per cent seeing this in May.
A net balance of 34 per cent of professionals also reported newly agreed sales falling rather than rising, which was also a weaker figure than the balance of eight per cent observing this in May.
The latest increase in interest rates and the impact this has already had on mortgage rates is clearly visible in the key Rics metrics regarding buyer inquiries, sales and prices which have all retreated over the past month— Simon Rubinsohn, Rics
This was the most downbeat sales figure since December 2022, when a net balance of 38 per cent of professionals saw sales falling.
A net balance of 46 per cent of professionals reported house prices falling rather than rising, further deteriorating from a balance of 30 per cent in May.
Rics said some survey participants indicated that homes with better energy efficiency credentials are holding their value in the current market.
Looking across to the rental market, a net balance of 40 per cent of professionals saw an increase in tenant demand.
At the same time, a net balance of 36 per cent saw landlord instructions falling rather than rising.
With rising demand still being met with a lack of available properties to let, a net balance of 53 per cent of professionals expect rental prices to increase over the near-term.
Figures from Moneyfactscompare.co.uk on Wednesday showed that, across all deposit sizes, the average two-year fixed homeowner mortgage was 6.70 per cent while the average five-year fix on the market was 6.20 per cent.
Earlier this week, average two-year fixed mortgage rates surpassed levels seen following last autumn’s mini budget.
Simon Rubinsohn, Rics chief economist, said: “The latest increase in interest rates and the impact this has already had on mortgage rates is clearly visible in the key Rics metrics regarding buyer inquiries, sales and prices which have all retreated over the past month.
“Inevitably in this environment, activity levels are likely to remain relatively subdued. However, an important message coming back from Rics agents is around ensuring prices are set with an eye on the market conditions of today, rather than the recent past; when this is done, sales are taking place.
“It is also worth bearing in mind that house prices are only very modestly down on their recent highs and well above where they stood prior to the onset of the pandemic.
“Further declines are possible but need to be seen in the context of the previous strength in the market.
“Additional questions included in the latest survey also provide some support for the notion that, on balance, properties with better energy efficiency credentials are holding their value better than some others.”
