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Surveyors report house price falls

Tuesday, 14 June 2005 12:00 AM

The number of chartered surveyors reporting a decline in house prices was at its highest level for nearly 13 years in May.

The monthly housing survey published by the Royal Institution of Chartered Surveyors (RICS) logged 49 per cent of its members reporting house price falls, the highest number since November 1992.

This is up from 40 per cent in April and 37 per cent in March suggesting the state of the market is worsening.

This is further reinforced by figures for new buyer enquiries, which slipped after remaining stable in recent months.

Completed sales in May were also 29 per cent down on the previous year, which reflects the slowdown in activity in the latter half of 2004.

RICS housing market spokesman Jeremy Leaf said: "The froth has come off the market. Choosy buyers can now afford to bide their time as available property has risen by a quarter in the past year. Sellers must adapt their behaviour to account for the fact that boom conditions of recent years have come to an end."

Liberal Democrat Shadow Chancellor Vince Cable said the figures reinforced "the possibility that the housing market bubble may burst".

"The Government must be on its guard," he added. "In the current context it is irresponsible for the Government to encourage individuals to put more of their private wealth in to a volatile market. Whether this be in the form of SIPPs, which also opens up a huge tax loophole or in the form of the new shared equity schemes which have substantial risks if the market rises or falls dramatically."

Recent surveys from Halifax and Nationwide have painted a picture of a housing market where property values are stabilising, recording a small fall and a small rise in prices respectively during May.

And the RICS survey reveals that rather than being concerned about the future, surveyors are becoming more optimistic.

Confidence was at its highest since November 2004, particularly since interest rates appear to have reached a peak and could soon fall.

The market conditions have also led to an increase in lettings as people rent homes while waiting to see whether the market stabilises before deciding whether to buy.

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