Property transactions fall further

The balance of Chartered Surveyors reporting house price falls decreased slightly in May but the average number of transactions per surveyor fell further, says the latest RICS' UK housing market.

The RICS house price balance improved slightly for the first time in ten months but still remains a significantly depressed figure. 92.9 percent more Chartered Surveyors reported a fall than a rise in house prices, a decrease from 94.7 percent in April. The regional picture remains gloomy with surveyors in East Anglia and the South East unanimous that house prices are falling.

The continuing lack of demand in the housing market is reflected in the collapse in transactions. The average number of transactions per surveyor (over the last three months) is now at 17.4, the lowest figure since 1978 and the net balance of new agreed sales remains in negative territory.

Demand remains weak with the balance of surveyors reporting new buyer enquiries still well into negative territory. However there has been a small revival with 51 percent more Chartered Surveyors reported a fall in buyer enquires compared to 69 percent in April.

The lack of new instructions to sell property continues to provide the market with some support in the near term. Large numbers of distress sales (either repossessions or sales from those attempting to avoid the repossession process) have not taken place. With mortgage arrears still low, until the worsening economic picture filters through into the employment situation, this lack of supply will prevent significant declines in house prices. In fact the net balance of Chartered Surveyors reporting new instructions to sell property fell to -26 percent, the second lowest figure since the question was asked in April 1999.

Commenting, RICS spokesperson Jeremy Leaf said: "While demand remains weak and housing transactions continue to evaporate, there is a very real danger to the wider economy. The property industry will not be the only casualty in the fall out from the credit crunch, with the high street and purveyors of a range of household goods, including furniture and white goods also feeling the pinch. Construction workers such as plumbers and bricklayers will start to see employment opportunities dry up as the pace of housing transactions continues to abate."