House Price Falls Worse Than Expected
October 27, 2007
The latest survey from the Royal Institution of Chartered Surveyors (RICS), has indicated that the housing market is shaping up for a worse downturn than expected. The survey indicates prices falling faster than at any time in the past two years.
The RICS report for September showed an increase in the number of members reporting a fall in house prices. Compared to only 3.3% in August, there were 14.6% more surveyors who reported a drop in house prices that those who reported a rise. The number of buyers is also down, falling for the tenth month in a row.
Five base rate rises seen since August 2006, and tightening lending criteria by mortgage providers had caused buyers to re-think before buying, according to RICS. Thus 51% of surveyors noted a reduction in the number of people seeking to buy, down from the 39% in August.
The outlook for both prices and buyers appears to be poor, and the number of properties coming to the market for sale was also down – for the fourth consecutive month. The only region to buck that downward trend was London.
Rics spokesman Jeremy Leaf 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 and volatility in the financial markets resulting in tightening of lending criteria, has certainly affected the confidence of buyers and sellers. 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.”
The only regions to see rising prices were London and Scotland.
The biggest falls were seen by East Anglia, the Midlands and Wales in September