International Property News

Housing gloom 'worst in 30 years'

15th April 2008

Confidence in the UK housing market fell in March to its lowest point in 30 years, according to a closely watched survey of property surveyors.

The Royal Institution of Chartered Surveyors' (Rics) said that 78.5% more surveyors reported a fall than a rise in house prices in March.

This was the gloomiest reading since Rics began the survey in 1978.

The results come after leading mortgage lenders offered similarly downbeat views on property prices.

Rics said the next six months would be crucial for homeowners and would-be buyers in the UK.

Historical low

The Rics house price balance dropped for the eighth consecutive month. It exceeded the previously lowest reading in June 1990.

Jeremy Leaf, Rics spokesman, said the gloom was the result of the credit crunch and its effect in stopping mortgage providers lending to each other.

"Sentiment is at a very low ebb and will continue to remain depressed while the economy suffers from this unique liquidity blight," he said.

But he added that a significant crash in prices remained unlikely and buyers with access to large deposits had the chance to get their hands on property they could not previously aspire to.

Following the trend

The survey follows March reports from the UK's two biggest mortgage lenders which reported month-on-month falls in house prices and predictions of a fall throughout 2008.

The Halifax last week reported a 2.5% fall in prices in March, the biggest monthly decline since September 1992 and the slowest annual growth for 12 years.

Prime Minister Gordon Brown and Chancellor Alistair Darling are meeting banks and mortgage lenders to discuss liquidity - widely regarded as the key factor affecting mortgage availability.

This has meant lenders are keen only to attract low-risk customers who can offer a significant deposit.

Some 49% more surveyors reported a fall than a rise in new buyer enquiries, up from 39% in January.

"Many would-be buyers are either struggling to raise the necessary finance to precipitate a move or are exercising caution in the light of current economic uncertainty," Rics said.

Falls in price

The falls in prices are particularly marked for flats and maisonettes and in certain parts of the country.

The sharpest falls were in the East Midlands and East Anglia, while slower falls were recorded in north-west England, Wales and London.

Scotland continued to buck the trend, with house prices reported to be rising slightly.

The stock of unsold property on surveyors' books declined by 1.3% compared with February, but up 50% over the year.

Source: BBC News