Rics: House price downturn accelerating

Tuesday, 13 November 2007 12:00 AM

House prices fell in October for the third consecutive month, according to the Royal Institution of Chartered Surveyors (Rics).

For the three months to October, 22.2 per cent more agents reported a fall in house prices than an increase.

This follows a 14.9 per cent fall in the number of agents reporting a fall rather than an increase in September, with sentiment in the market now at its lowest level since July 2005.

"The housing market is seeing the awaited slowdown that many had been expecting, with modest falls reported across most UK regions," said Rics spokesman Ian Perry.

Prices fell in every region, excluding London, with the largest falls in East Anglia, followed by the West Midlands, south-west, East Midlands and Wales.

"Credit market turmoil has yet to put downward pressure on prices in the capital, although prices have now stabilised even here," continued Ian Perry.

A combination of factors has continued to exert downward pressure on prices.

Prices remain historically high, whereas interest rates remain prohibitive to borrowing.

Coupled to this, affordability of property is at the lowest ever level.

These factors have all contributed to a fall in demand.

The number of new buyer enquiries fell for the eleventh month in a row, with 41 per cent more surveyors reporting a fall than a rise.

However, limited supply has continued to support the market.

New instructions to sell fell for the fifth consecutive month - there being little incentive to sell with economic growth still strong and consumers' confidence in their future financial position high.

There was also a slight increase in the number of sales.

Each estate agent sold an average of 23.2 properties in October, up from 22.9 in September.

This is, however, 15.4 per cent lower than the levels recorded in October 2006.

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