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Last Updated: Tuesday, 13 November 2007, 14:35 GMT
Surveyors see house price falls
Aerial view of London
Only in London are prices still rising, says Rics
The slowdown in the housing market is becoming more pronounced, says the Royal Institution of Chartered Surveyors (Rics).

Its latest survey of members in England and Wales suggests prices in October fell for the third month in a row, and at the fastest pace since July 2005.

London was the only region where prices did not fall during the month, according to the Rics survey.

Separately mortgage lenders said costs for first-time buyers were rising.

Downward pressure

Almost all surveys have suggested the market has been cooling since the summer.

"The housing market is seeing the awaited slowdown that many had been expecting, with modest falls reported across most UK regions," said Rics spokesman Ian Perry.

"Credit market turmoil has yet to put downward pressure on prices in the capital, although prices have now stabilised even here," he added.

The Bank of England's decision not to reduce rates earlier this month will have disappointed many borrowers
Michael Coogan, director general, CML

A combination of high prices and increased interest rates have finally reined in the housing market, with the unaffordability of homes, relative to average incomes, having risen to record levels.

Enquiries from new buyers also fell, for the 11th month in a row, as other factors came into play.

"Interest rate rises, the recent credit crunch and the subsequent tightening of lending conditions have all had an impact upon demand," said Rics.

Overall, 22% more surveyors in England and Wales in October saw prices fall than rise in their locality.

Although prices are still rising slightly in Scotland they are now falling sharply in Northern Ireland, Rics said.

First-time buyers 'squeezed'

At the same time, new figures from the Council for Mortgage Lenders suggest first-time buyers are finding it increasingly expensive to get onto the property ladder.

It says the average first-time buyer spent 20.4% of their monthly income on mortgage interest payments in September, the highest level since 1991.

"Higher interest rates are now beginning to slow the housing market," said CML director general Michael Coogan.

"The Bank of England's decision not to reduce rates earlier this month will have disappointed many borrowers," he added.

"Looking forward, affordability is likely to continue to constrain buying activity, which we expect to remain subdued."

The housing market picture across the UK

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