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House price fall 'accelerating'

11/10/2007

Failing demand in the UK residential property market is driving a fall in house prices, the Royal Institution of Chartered Surveyors (Rics) says.

Its monthly housing market survey saw another slump in confidence as 14.6 per cent of surveyors reported falls rather than rises in house prices in September.

This acceleration from August's negative balance of 3.3 per cent has been blamed on struggling demand caused by the introduction of home information packs, recent interest rate rises and instability in the financial markets.

"As a result [of these factors], 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," Rics spokesperson Jeremy Leaf said.

Surveyors in some parts of England are informally predicting a minimum house-price drop of ten per cent in the next 12 months and figures today on new buyer enquiries - down at their fastest pace since March 2003 - appear to be contributing to this drift.

Despite the problems Mr Leaf believes there is no danger of a crash in the residential market because of a shortage of properties coming on to the market, however.

"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," he added.