Money News
RICS (Royal Institution of Chartered Surveyors) is reporting in its latest (January) housing market survey a continuation of the recent slowdown seen in house prices. Indeed, the balance of Chartered Surveyors reporting house price falls increased again last month, dropping for the sixth month in a row.
54.7% more surveyors reported a fall than a rise in house prices; an increase from 49.1%. According to surveyors, the only part of the UK where prices continue to rise is Scotland with the net balance of surveyors there reporting price rises edging up from 3% to 7%.
The decline in demand picked up speed as new buyer enquiries fell at the fastest pace since October. Prior to October, the previous occasion when buyer enquiries reached this level was August 2004. 35% more surveyors reported a fall than a rise in new buyer enquiries, down from 25% in December. RICS says the fallout from the credit crunch continues to prevent many would-be-buyers from entering the market and it is likely that demand will remain subdued while mortgage lending criteria is tight.
This weak trend in demand is having a visible impact on the market despite a lack of supply. The stock of unsold property on surveyors' books jumped by more than 10% and has increased by in excess of 40% since September 2007. Currently the average level of unsold property per surveyor stands at 85 - the highest level since February 1999 when the average figure per surveyor was 86. As a result the ratio of completed sales compared to the stock of unsold property on the market fell to 28.6%, down from 30.7%.
RICS spokesman, Jeremy Leaf, said: "A lack of demand and confidence in the housing market is clearly behind the recent price slowdown. Tightening mortgage lending criteria is a block to many who are keen to take the housing market plunge. Agents are finding it difficult to market properties to an audience which has decided to watch the current economic theatre from the wings."
Leaf adds however that if mortgage lenders filter the recent interest rate cuts into the market, demand should begin to increase. In the near term, the housing market will continue to be shielded from significant price falls while employment conditions are strong. The market need only fear a significant fall in prices if job losses start to multiply.
13 February 2008 © Moneyextra.com
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