The Royal Institution of Chartered Surveyors (RICS) said its new buyers indicator fell from +8 to -7 in April, the first time it has turned negative in nine months.
“The rising cost of mortgage financing as well as growing concerns about the economic outlook are unsurprisingly having an impact, albeit relatively modest at this stage,” said RICS Chief Economist Simon Rubinsohn.
The Bank of England has raised interest rates four times since December and is expected to do so again next week, raising the bank rate to 1.25%, despite weak economic growth prospects.
The Economic Co-operation Organization said on Wednesday that Britain’s economy would grow 3.6% this year before capping 0.0% next year, the weakest forecast for 2023 among any country in the Group of Nations. 20 with the exception of Russia.
RICS said forecasts for residential property sales over the next three and twelve months have deteriorated after showing little change in May.
Prices have been supported by the long-standing shortage of properties coming onto the market.
RICS said there was a difference of +73 percentage points between the proportion of surveyors reporting a rise in prices and those reporting a fall. This figure is down from +80 in April, but corresponds to the average of the last six months.
A Reuters poll of economists indicated a lower +76 drop.
Further out, a net balance of +42 saw house prices higher in a year, the weakest reading since January 2021.
Data released by mortgage lender Halifax on Wednesday showed the annual pace of house price increases in Britain slowed in May for a third consecutive month. (Reporting by William Schomberg, editing by Andy Bruce)