House prices fall for a second month

JON WELCH Confidence in the housing market has weakened further with prices falling for the second successive month, according to an authoritative new report.Demand is slowing and supply is limited with sellers hesitant about putting their homes on the market, according to the Royal Institution of Chartered Surveyors (RICS).

JON WELCH

Confidence in the housing market has weakened further with prices falling for the second successive month, according to an authoritative new report.

Demand is slowing and supply is limited with sellers hesitant about putting their homes on the market, according to the Royal Institution of Chartered Surveyors (RICS).

Simon Hickling, a RICS residential chartered surveyor in Norfolk, said new rules forcing sellers to have a Home Information Pack (HIP) drawn up and the so-called “credit crunch” were taking their toll.

“HIPs are certainly making sellers who want to test the market think again and buyers are showing more caution due to the banking and financial situation,” he said.

“New builds in the area and the uncertainties being offered are luring buyers away from the second-hand market.”

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House price growth remained negative for the second month in succession, with 15 per cent more surveyors reporting price falls than gains.

New instructions also declined for the fourth consecutive month with 21pc more surveyors reported a fall than a rise in new instructions to sell property.

Surveyors' confidence in both sales and prices deteriorated further, and new buyer enquiries declined for the 10th consecutive month and at the fastest pace since March 2003.

Five interest rate increases since August 2006 and tightening mortgage lending criteria have had a major impact on property affordability for buyers.

Scotland saw the strongest price growth but the largest price falls were reported in East Anglia, Wales and in the Midlands. Smaller falls were reported in the South East, South West, Yorkshire and Humberside and the North West.

RICS spokesman, Jeremy Leaf, said: “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.

“The combination of rising interest rates, the introduction of HIPs and volatility in the financial markets resulting in tightening of lending criteria has certainly affected the confidence of buyers and sellers.

“As a result, 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 market-place."

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