Sentiment reaches historical low

The balance of Chartered Surveyors reporting house prices falls increased to an historical low in March.

However, a lack of new supply is still preventing significant price falls despite rising stock levels, says RICS.

The RICS house price balance dropped for the eighth month in succession.

78.5% more Chartered Surveyors reported a fall than a rise in house prices, an increase from 65.7% in February.

This figure has exceeded the historical low of June 1990, when 64.5% more Chartered Surveyors reported a fall in house prices and is now the lowest figure since the survey began in 1978.

The regional picture is even more depressed.

In the East Midlands 89% more Chartered Surveyors reported a fall than a rise in house prices and a net 86% reported falls in East Anglia.

Scotland still remains the only UK region with the net balance of surveyors reporting price rises.

4% more Chartered Surveyors reported a rise than fall down from to 10%.

Demand continued to weaken as new buyer enquiries fell further.

49% more Chartered Surveyors reported a fall than a rise in new buyer enquiries, up from 39% in January.

Many would-be-buyers are either struggling to raise the necessary finance to precipitate a move or are exercising caution in the light of current economic uncertainty.

With the official interest rate cuts not being passed on to the high street there is little expectation that demand will improve in the near term.

It is clear that price falls are being driven by the inability of many to secure finance rather than an influx of supply into the market.

The net balance of surveyors reporting new instructions to sell property fell further into negative territory, as the pressure to sell continues to be light given the still-strong employment picture.

The ratio of completed sales compared to the stock of unsold property on the market fell to 24.8%, down from 26.3%, and is the lowest number since September 1996.

Both sales expectations and price expectations fell. The net balance of surveyors expecting prices to rise is at the all-time low of -73%.

Sales expectations moved back into negative territory, with many Chartered Surveyors turning pessimistic in the face of continuing financial turmoil.

RICS spokesman Jeremy Leaf said: "Sentiment is at a very low ebb and will continue to remain depressed while the economy suffers from this unique liquidity blight.

"The slowdown in prices is directly attributable to a lack of available finance which has hit demand.

"However, until new supply increases dramatically a significant crash remains unlikely.

"The next six months will be a crucial period for homeowners.

"But would-be buyers with larger deposits may see this market as an opportunity to acquire property in areas to which they could not previously aspire as recently as the end of 2007."