Rics: Housing market grinds to halt

Tuesday, 10 June 2008 12:00 AM

The property market fell further today, with research from the Royal Institution of Chartered Surveyors (Rics) finding transaction levels are now at the lowest level since 1978.

Over the last three months the average number of transactions per surveyor was just 17.4 - down from 18.5 in April.

Although this indicator of market slack has now slipped through the levels touched in 2005 it remains comfortably above the lows seen in the early 1990's when it briefly dropped to 11.4.

"While demand remains weak and housing transactions continue to evaporate, there is a very real danger to the wider economy," said Rics spokesperson, Jeremy Leaf.

"The property industry will not be the only casualty in the fall out from the credit crunch, with the high street and purveyors of a range of household goods, including furniture and white goods also feeling the pinch.

"Construction workers such as plumbers and bricklayers will start to see employment opportunities dry up as the pace of housing transactions continues to abate."

However, there was a slight reversal in the number of agents reporting a fall in property prices.

Some 92.9 per cent more agents reported a fall than a rise in house prices, a slight improvement from the figure of 94.7 per cent recorded last month.

The regional picture remains gloomy with surveyors in East Anglia and the South East unanimous that house prices are falling.

Finally, demand remains weak with the balance of surveyors reporting new buyer enquiries still well into negative territory.

However, there has been a small revival with 51 per cent more Chartered Surveyors reported a fall in buyer enquires compared to 69 per cent in April.

Commenting on the findings Howard Archer, of analysts Global Insight, said: "May was the tenth successive negative balance and the second deepest since the survey began in January 1978.

"Rics indicated a lack of new houses coming on to the market was helping to limit the depth of the fall in prices, noting that few people are currently having to sell for 'distressed' reasons.

He concluded: "While there was a very limited improvement in the prices balance, other elements of the Rics survey indicated that housing market activity was at its weakest level for some 30 years which does not bode at all well for house prices over the coming months."

Chris O'Toole

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