Housing market
Surveyors highlight deep cracks in housing market
Fresh evidence of a slowdown as the Royal Institute says that the market has fewer homes, falling prices and absent buyers
House prices in the UK have fallen for the second consecutive month and the number of those seeking to buy has dropped for the tenth month in a row, the Royal Institution of Chartered Surveyors (RICS) said today.
RICS said that 14.6 per cent more surveyors reported a drop in house prices last month than those reporting a rise.
It is the biggest difference for two years. In September 2005, 19.4 per cent more surveyors reported seeing a drop in the price of property than those who saw a rise.
In August this year, the figure was only 3.3 per cent.
RICS said that both the five increases in interest rates since August 2006 and mortgage providers tightening up their lending criteria had put the brakes on inquiries from potential buyers.
It said that 51 per cent more of its members reported a decline in the number of people looking to buy a new home compared with 39 per cent of surveyors in August and that fewer properties were coming on to the market.
In the UK, new instructions had declined for the fourth month in a row, but in London, people are still eager to sell their properties.
Jeremy Leaf, of RICS, said: “Although house prices continue to fall, the underlying economy remains strong.
"A major correction in the market seems unlikely while economic growth is above trend and employment conditions remain buoyant.
“The combination of rising interest rates, the introduction of Hips [home information packs] and volatility in the financial markets resulting in tightening of lending criteria has certainly affected the confidence of buyers and sellers.”
He added: “As a result, some would-be buyers are turning to the rental market, whereas others, conscious that the next move in interest rates is now likely to be down rather than up and market meltdown is highly improbable, are seizing the opportunity to negotiate with more flexible vendors in a less competitive marketplace.”
This month the Bank of England’s Monetary Policy Committee voted to keep the UK interest rate unchanged at 5.75 per cent.
Both Nationwide and Halifax recently reported declines in the growth of house prices.
Last month, Halifax said that the rate of increase slowed to 0.6 per cent, the first monthly fall since December last year.
Overall, house prices in the third quarter of this year rose by 0.9 per cent, but this was compared with an increase of 3 per cent in the first three months of 2007 and 2.3 per cent in the three months to June.
Nationwide said that prices rose 1.6 per cent rise in the three months to September, but this compared with a 1.9 per cent in the three months to June.
(Published by Times Online, October 11, 2007)
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