Surveyors report further falls in house prices

The balance of Chartered Surveyors reporting house price falls increased even further but tight supply is limiting the extent of the decline, says RICS’ UK housing market survey.

The RICS house price balance dropped for the ninth month in succession. 95.1 percent more Chartered Surveyors reported a fall than a rise in house prices, an increase from 79.4 percent in March. The regional picture is even more depressed with surveyors in East Anglia, the North and North West unanimous that house prices are falling. The net balance in Scotland turned negative where previously it was the only UK region where the majority of surveyors were reporting house price increases.

However, the scale of house price falls remains relatively small at this stage compared to past downturns. The lack of new instructions to sell property continues to provide a crutch to the market. Large numbers of distress sales (either repossessions or sales from those attempting to avoid the repossession process) have not yet appeared in the market place and, while mortgage arrears remain low and the employment situation remains strong, the lack of supply will continue to prevent large declines.

Demand continued to weaken as new buyers’ enquiries fell further. 68 percent more Chartered Surveyors reported a fall than a rise in new buyer enquiries, up from 51 percent in January. Many would-be-buyers are either struggling to raise the necessary finance or are exercising caution in the light of current economic uncertainty. With the official interest rate cuts not being fully passed on to the high street, lenders continue to pull back on the range of mortgage products and further scale down loan to value ratios, there is little expectation that demand will improve in the near term.

As a result of this lack of supply, the average number of unsold stock on surveyors’ books edges down. The ratio of completed sales compared to the stock of unsold property on the market fell to 21.1 percent, down from 24.6 percent. Looking forward, the net balance of surveyors expecting prices to rise is at -80 percent, compared to -74 percent in March.

Commenting, RICS spokesperson Ian Perry said: “Although most surveyors are now seeing price declines, the extent of the fall, is at this stage, quite modest. The real issue is the collapse in the number of housing transactions. This has very real implications, not just for the property industry but also the high street and the wider economy.

“Sellers of white goods are likely to suffer if this low level of turnover persists for much longer. This is a key reason why the Bank of England should act at its next meeting by cutting the base rate.”