The housing market continued to lose momentum in September, according to new data and analysis published by the Royal Institute of Chartered Surveyors.
According to the latest RICS Residential Market Survey, surveyors reported a decline in both sales and new buyer enquiries in September, bringing market sentiment to its lowest level since June of last year.
In the September survey, 20% more surveyors who responded reported a fall in demand from potential home buyers, making it the sixth consecutive month of negative results. 15% of respondents also reported a fall in sales being completed, the worst result since July 2015.
Simon Rubinsohn, chief economist at RICS, said; "In part, this is a reflection of affordability constraints hitting the higher priced segments of the market. It is perhaps also indicative of a shift in economic momentum in the face of the increasing possibility of the first hike in base rates in over ten years.”
There has been growing speculation that interest rates will rise next month. A rise in interest rates could affect mortgage borrowers by pushing up their monthly repayments. For some an increase in mortgage rates could make their repayments unaffordable.
While the Bank of England is likely to make only a small rise in interest rates initially, their effect will be cumulative as they continue rising over the next few years. According to research by Halifax, someone with a mortgage advance of £150,000 could eventually find themselves paying £161 a month more than they are now.
The fall in house sales will also worry homeowners who are already finding it difficult to meet their monthly repayments or who are in negative equity as it could make it harder for them to sell their property to resolve their financial problems and could push prices lower as demand falls.
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