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Finance

House prices 'begin fall'

13/09/2007

UK house prices began to decline in August this year, the Royal Institution of Chartered Surveyors' (Rics) monthly housing market survey suggests.

It registered more respondents citing a fall rather than increase in house prices for the first time since October 2005 last month.

The negative balance of 1.8 per cent is a significant drop from the 10.8 per cent positive balance reported in July, but Rics believes the negative growth is set to become more entrenched for the rest of the year.

Spokesman Ian Perry commented: "Affordability is at its most stretched in over a decade and many will worry that rising mortgage repayments will prove a step to far.

"The market will soften further, going into the autumn, reducing some impetus from those that have been chasing a rapidly moving target," he predicted.

New buyers were shown to be particularly affected by the five quarter-point interest rate rises seen in the 12 months to July this year, with inquiries falling at their fastest pace since August 2004.

And increasing overall pricing pressure on family-home buyers, Rics also noted that numbers of four-bedroom properties coming on to the market had slipped by 51 per cent on levels this time a year ago.

Mr Perry blamed the government's home information packs, which from August 1st were mandatory for all four-bedroom properties, for the shortfall.