House prices will keep falling, estate agents warn as they give bleakest outlook in three years

House prices will continue falling over the coming months, as higher interest rates put buyers off moving home.Estate agents across the country warn housing demand is either 'falling or stagnant' with fewer buyers contacting estate agents and fewer sales being agreed.This bleak outlook was revealed in the latest survey from The Royal Institution of Chartered Surveyors (Rics), which asks its estate agent and surveyor members what they are seeing on the ground.It revealed an outlook for the housing market that has deteriorated to its weakest level since July 2023.Back then, the average five-year fixed rate mortgage was 6.37 per cent, according to Moneyfacts compared to 5.97 per cent today. The majority of Rics members reported that house prices were falling in its October survey, slightly more than in September. Prices in London, East Anglia, the West Midlands and the South East are suffering most with only Scotland and the North West marginally bucking the trend. Bleak: October's Rics survey shows subdued demand, falling agreed sales and further downward pressure on house pricesTrevor Brown, a Rics member based in Southend-On-Sea, says prices are in freefall with little optimism of things improving soon.'The market is a bit grim,' he says. 'Perpetual news gloom and increasing interest rates has led to more property available than active buyers. 'Prices have fallen by as much as 10 per cent over the last 12 months.David Hickman, a surveyor in South Devon, says prices have been falling for over two years where he is - and that some homes are being sold for 18 per cent less today than they would have fetched two years ago. Robert Hurst of Auction House in East Anglia warns a glut of landlords attempting to sell is forcing prices lower because there are 'more auction sellers than buyers'.The downbeat survey from Rics comes after Lloyds Banking Group reported on Friday that house prices fell at the steepest rate in more than three years in October.Average property prices dropped by 1.2 per cent in the 12 months to October 2026 after four months of consecutive price falls.Much of the market slowdown is being attributed to higher mortgage rates putting pressure on what people can afford to buy.In February, buyers with a 20 per cent deposit were able to secure rates as low as 3.91 per cent while those with a 40 per cent deposit could secure rates of 3.7 per cent, according to Moneyfacts.Today these buyers face the prospect of paying well over a percentage point more.Assuming a 25-year repayment term, someone buying with a £300,000 mortgage and 20 per cent deposit on a 3.91 per cent rate would have paid £1,569 a month in February. Now, the best they can get is 5.05 per cent rate and they'll pay £1,763 a month.Net mortgage approvals for house purchases – an indicator of future borrowing – decreased to 53,400 in September, according to the Bank of England, down from 55,900 in July and well below an average of around 60,100 over the previous six months before that. The majority of Rics members continue to report fewer new buyer enquiries and they also note a drop-off in sales numbers with October's survey marking the weakest reading of the past three months.Looking ahead towards the next 12 months, the outlook from Rics members about future property sales is the most pessimistic it's been since July 2023.Interestingly, this pessimism is greatest among Rics members in the West Midlands at present, albeit it extends across most regions to varying degrees.Andrew Oulsnam, a Rics member in Birmingham, says new instructions have 'fallen through the floor'.Rics member Colin Townsend in Malvern describes the situation as 'a struggle at the moment'. He adds: 'It's been an Autumn of price reductions and slow sales. Vendors are going to lower their expectations as we enter the winter months.'More Rics across Britain members think prices will fall over the coming year than those who think prices will rise. The Bank of England increased interest rates to 4 per cent last week and there are expectations they will rise yet further over the coming months as MPC members attempt to curb a rebound in inflation.While inflation was up 3.5 per cent in the year to September, it 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 where they are for some time - or even edge higher. If that happens, then in all likelihood buyer enquiries, sales volumes and house prices will all continue to fall. However, Tom Bill, head of residential research at Knight Frank, says much hinges on a lasting ceasefire in the Middle East between Iran and the US.'The latest slump in confidence shows how decisions in Washington, not Westminster, are shaping the outlook for the UK housing market,' says Bill.'Rising mortgage rates have put downward pressure on sales volumes and prices this year due to the energy price shock caused by the Middle East conflict. 'There is growing pressure on Donald Trump to find a diplomatic solution following the mid-term elections, which means borrowing costs have started edging lower over the last week, a trend that would only accelerate if a lasting ceasefire was agreed.'How to find a new mortgage Mortgage rates have jumped as conflict with Iran has driven up inflation expectations and dashed hopes of interest rate cuts.If you need a mortgage because you are buying a home, or your current fixed rate deal is due to end, you should explore your options as soon as possible. This is Money has a long-standing partnership with fee-free broker L&C, to provide you with expert mortgage advice.Use This is Money and L&Cs best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs.Or use L&C’s online Mortgage Finder to search thousands of deals from more than 90 different lenders to discover the best deal for you.Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage