Property Market Pressures- time to review your situation?

Posted: Thursday, 31 August 2023 @ 10:19


In a recent press release, the Royal Institution of Chartered Surveyors (RICS) has reported a significant decline in UK house prices, marking the most substantial drop since the financial crisis of 2008. This alarming trend is a reflection of the challenging lending environment and its cascading impact on the housing market. The RICS survey for July unveils worrisome statistics that prompt us to delve into the causes, consequences, and potential paths for recovery in the housing sector.


The Numbers Tell the Story

The RICS survey, which gauges the balance between surveyors reporting price increases and those reporting decreases, paints a grim picture for the housing market. The figures plummeted to -53 in July, down from a revised -48 in June, signalling a sharp decline in house prices. This unexpected drop also marks the lowest reading since April 2009, a time etched in memory due to the global financial crisis. The report suggests that this downturn is a result of the ongoing constraints within the lending landscape, placing immense pressure on potential homebuyers.


Tightening Lending Environment

The report underlines the detrimental effects of a tighter lending environment on housing activity. With stringent lending practices and higher interest rates, potential homebuyers are hesitant to enter the market, waiting to see how the situation evolves. The increased strain on affordability due to elevated rates has prompted buyers to adopt a wait-and-watch approach, creating a slowdown in property sales. The affordability challenge also has implications for landlords seeking mortgages, as rental income struggles to align with the requisite affordability criteria set by lenders.


Market Expectations and Adaptation

Short-term market expectations remain pessimistic, as indicated by the RICS report. However, experts like Jeremy Leaf, a former RICS chairman and London estate agent, suggest that while the market is indeed facing challenges, there are signs of resilience. Leaf highlights a growing determination among buyers, particularly first-time buyers burdened by rising rents. This newfound determination is coupled with a cautious approach to avoid overpaying in a market marked by uncertainty. Tomer Aboody, Director of MT Finance, emphasizes the role of interest rates and banks' flexibility in shaping the market's trajectory. As interest rates potentially peak and affordability concerns persist, the next few months will be crucial in understanding how the housing sector navigates these challenges. Aboody also questions whether banks will re-evaluate their rental coverage requirements to offer much-needed support to landlords.



The RICS report's findings shed light on the pressing issues that the UK housing market is currently facing. The significant decline in house prices, reminiscent of the 2009 financial crisis, serves as a wake-up call for stakeholders across the industry. The tight lending environment, affordability concerns, and uncertainty surrounding interest rates collectively contribute to the present state of affairs. However, amidst the challenges, there are signs of resilience, determination among buyers, and innovative adaptations by developers. As the housing market navigates through these complexities, the coming months will be instrumental in shaping its future trajectory and recovery.   These kinds of pressures and changes to the property market mean that our clients may need to review their situation, potential moves or stays, and in some cases, their portfolios. Change constantly prompts new ideas.  

We at the IPW recommend our clients regularly review their Estate Planning requirements to make sure they are still relevant to their situation and intentions.