UK house prices fall again

Surveyors say numbers of unsold houses are rising

UK house prices have dropped for the second month in succession according to a survey by the Royal Institution of Chartered Surveyors (RICS).

London was hardest hit as prospective buyers worried about continued economic uncertainty.

Other parts of southern England suffered price falls but further north the market continued to enjoy some growth.

The survey, which is based on the views of estate agents and surveyors, stressed price falls were modest.

The survey results are bound to increase concerns that the UK housing market faces a painfull price correction.

The same survey last month showed prices sufferring their biggest fall since 1995.

No spring upturn

During the first three months of the year sales fell by 12% compared with the final quarter of 2002, and they were down 21% on the first three months of 2002.

We may have the ingredients for a bounce back in the market later in the year

Ian Perry, RICS spokesman

At the same time, the traditional February and March upturn in new buyer inquiries failed to arrive due to growing uncertainty over the state of the economy and the war in Iraq.

The number of properties being put up for sale increased during March, as people tried to sell their homes at the peak of the market.

The stock of unsold houses on surveyors' books has risen steadily since last summer.

Chartered surveyor estate agents now have an average of 70 properties on their books.

But although this is up from 64 in February, it is still well below the long-run average of 117.

Nationally, 5% more surveyors say prices are falling, rather than rising.

Bounce back?

Looking ahead, surveyors expect further price falls, with 48% more surveyors expecting prices to go down rather than increase, compared with 40% predicting falls in February's survey.

The average figures disguise stronger conditions in Northern areas and Wales where prices are still rising, albeit at a reduced rate.

Recent surveys from the Halifax and Nationwide have shown a similar north-south divide but overall UK house prices continue to rise.

RICS spokesman Ian Perry said he was hopeful of price recovery.

"Unemployment and lending rates remain low, and with good Easter weather and the end of the Iraq war in sight, we may have the ingredients for a bounce back in the market later in the year," he said.

Cheaper moving

While house prices have, until recently, been moving steadily upwards for the past 10 years it appears the cost of moving has been heading in the opposite direction.

A survey by the Woolwich found the cost of moving home has fallen by nearly a quarter over the last decade.

Someone moving from a £150,000 home to one worth £200,000 in England and Wales now spends an average of £5.523 on estate agent fees, stamp duty and other legal fees. In 1993 the cost was £7,378.

"Contrary to popular perception the 25% drop in house moving fees over the past 10 years is largely because estate agents have dropped their fees by around 45%," said Andy Gray, head of mortgages at the Woolwich.

"With house price inflation set to slow markedly this year, this could lead to increased competition among estate agents and less activity in the property market.

"We would expect these fees to reduce yet further as we move into 2004."

The Woolwich found big regional variations in moving costs, with people in the north of England paying less than those in the south.