Money News
House price falls across the country are now more widespread than they've been for 30 years, according to the latest housing market figures from RICS (Royal Institution of Chartered Surveyors).
The RICS house price balance in April dropped for the ninth month in succession; 95.1% more chartered surveyors reporting a fall than a rise in house prices, an increase from 79.4% in March.
The regional picture is even more depressed with surveyors in East Anglia, the North and North West unanimous that house prices are falling. Elsewhere, the net balance in Scotland turned negative where previously it was the only UK region where the majority of surveyors were reporting house price increases. All of the aforementioned said, the scale of house price falls remains relatively small at this stage compared to past downturns, says RICS.
Worth noting is that large numbers of distress sales (either repossessions or sales from those attempting to avoid the repossession process) have yet to appear in the market place and, while mortgage arrears remain low and the employment situation remains strong, the lack of supply will continue to prevent large declines.
Demand continued to weaken in April as new buyers' enquiries fell further - 68% more surveyors reporting a fall than a rise in enquiries, up from 51% in January. Indeed, many would-be-buyers are either struggling to raise the necessary finance or are exercising caution in the light of current economic uncertainty.
The report also shows that the ratio of completed sales compared to the stock of unsold property on the market fell to 21.1%, down from 24.6%. Looking forward, the net balance of surveyors expecting prices to rise is at -80%, compared to -74% in March.
Commenting on the data RICS spokesperson Ian Perry said: "Although most surveyors are now seeing price declines, the extent of the fall is, at this stage, quite modest. The real issue is the collapse in the number of housing transactions.
"This has very real implications, not just for the property industry but also the high street and the wider economy."
Meanwhile, Ross Bowen, managing director of Connells Survey & Valuation said that a shortening supply of homes coming on the market is far more worrying than moderating house prices.
Transactions have halved in the last year. Many people are severely restricted in accessing affordable mortgages, and first time buyers are at a particular disadvantage.
"The government and Bank of England must address the lack of mortgage finance available to borrowers if we are to get the property market moving again. We need to see lower interest rates passed onto homebuyers and a lifting of restrictive lending criteria," he notes.
Economic consultants, Capital Economics - noting that the housing market slump is deepening - said that with the economy set to slow sharply, and activity likely to be further hampered by the continued tightening in lending criteria, house prices still have much further to fall.
13 May 2008 © Moneyextra.com
Moneyextra.com recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.