House prices will continue to fall over coming months as higher interest rates deter people from buying homes, according to the latest survey from the Royal Institution of Chartered Surveyors. The outlook for the housing market has deteriorated to its weakest level since July 2023, with estate agents across the country reporting that housing demand is either falling or stagnant and fewer buyers contacting them. The majority of Rics members reported that house prices were falling in its October survey, slightly more than in September. London, East Anglia, the West Midlands and the South East are suffering most, while Scotland and the North West are marginally bucking the trend.
Rising mortgage costs are the primary driver of the slowdown. In February, buyers with a 20 per cent deposit could secure rates as low as 3.91 per cent, according to Moneyfacts. Today, the best available rate for such buyers is 5.05 per cent. For someone buying with a £300,000 mortgage and a 20 per cent deposit on a 25-year repayment term, this means monthly payments have risen from £1,569 in February to £1,763 today. The Bank of England said net mortgage approvals for house purchases decreased to 53,400 in September, down from 55,900 in July and well below the previous six-month average of around 60,100.
Recent data reinforces the downturn. Lloyds Banking Group reported that house prices fell at the steepest rate in more than three years in October, dropping 1.2 per cent in the 12 months to October 2026 after four months of consecutive price falls. Rics members reported fewer new buyer enquiries and noted a drop in sales numbers, with October marking the weakest reading of the past three months. More Rics members across Britain expect prices to fall over the coming year than those predicting rises. The outlook from Rics members about future property sales is the most pessimistic since July 2023.
Estate agents on the ground describe mounting challenges. Trevor Brown, a Rics member in Southend-on-Sea, said prices have fallen by as much as 10 per cent over the last 12 months, while David Hickman, a surveyor in South Devon, said some homes are being sold for 18 per cent less today than they would have fetched two years ago. Andrew Oulsnam, a Rics member in Birmingham, said new instructions have fallen through the floor.
The pressure on prices looks set to persist. The Bank of England increased interest rates to 4 per cent last week, with expectations they could rise further as the Monetary Policy Committee attempts to curb inflation. Inflation was up 3.5 per cent in the year to September but is now expected to reach 5 per cent next year as higher energy costs feed through into wider prices. This could mean mortgage rates remain elevated or edge higher, putting continued downward pressure on buyer enquiries, sales volumes and house prices.
For anyone needing to buy a home or facing the end of a fixed-rate mortgage deal, rising interest rates mean significantly higher monthly payments, making homeownership less affordable and potentially forcing some buyers out of the market entirely.