House prices continue to rise as demand declines, survey shows

House prices are continuing to rise although there is less demand in the market, a new survey has found.

The Royal Institution of Chartered Surveyors (Rics) residential market study for October highlights how the Scottish housing market has continued to weaken.

Residential property sales fell in October for the sixth consecutive month in Scotland, with a net balance of -45% of survey respondents reporting a fall in new buyer inquiries.

The net balance shows the difference in the number of property professionals reporting an increase with those reporting a decrease. A positive balance denotes a rise within the sector, while the opposite is true for a negative net balance.

Fewer houses are being put on the market, with a net balance -43% of respondents saying new instructions had fallen, meaning there are fewer properties available to buy.

Whilst the demand for housing is easing, the prices are continuing to increase – a net balance of +36% of surveyors said residential property prices rose over the past three months.

Alan Kennedy, of Shepherd Chartered Surveyors in Fraserburgh, Aberdeenshire, said: “Certain sectors of the market are still performing well, particularly well-presented properties in good condition.

“Demand will, however, be impacted by increasing mortgage rates. Unpredictable times ahead.”

Simon Rubinsohn, Rics’ chief economist, said: “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.

“The settling down in financial markets could provide some relief, although it may be premature to assume this will be reflected in a reduction in lending rates anytime soon.”