Surveyors see house price falls

Surveyors believe the market will pick up later this year

The number of chartered surveyors reporting falling house prices has reached its highest level for more than 12 years, a survey has said.

The Royal Institution of Chartered Surveyors (Rics) said the balance of surveyors reporting price falls over rises reached minus 49 in May.

Rics added that the number of enquiries from new buyers had dipped recently.

A number of recent property surveys have shown a slowdown in house price growth over the past few months.

On Monday, the latest survey from the Office for the Deputy Prime Minister said annual house price inflation fell to 6.9% in April, down from 12.6% in March.

Boom years over

Rics' seasonally-adjusted figure of minus 49 was the lowest balance it had recorded since November 1992.

It said the most noticeable price falls had been seen in the Midlands and Yorkshire & Humberside. Scotland was the only part of the UK to see prices rise.

Choosy buyers can now afford to bide their time as available property has risen by a quarter in the past year Jeremy Leaf, Rics

Rics also said that the rise in interest from buyers seen at the start of the year had "petered out against the backdrop of a slowing economy".

The number of completed sales was down 29% in May against the same point last year.

Upside seen

Despite the downbeat findings, Rics said that surveyors were anticipating rising sales in coming months following signs that UK interest rates have peaked and could begin to fall.

Rics added that the stable jobs market in the UK would also continue to provide underlying support to the housing market.

"The froth has come off the market," said Jeremy Leaf from Rics.

"Choosy buyers can now afford to bide their time as available property has risen by a quarter in the past year.

"Sellers must adapt their behaviour to account for the fact that boom conditions of recent years have come to an end."

Soft landing?

Recent surveys from major mortgage lenders have indicated that the Bank of England's five interest rate rises between November 2003 and August 2004 have taken the heat out of the housing market.

There is evidence that prices are falling, but it is happening much more slowly than we were expecting Ed Stansfield, Capital Economics Has the housing market avoided a crash?

Earlier this month, the Nationwide said annual price inflation had fallen to 5.5% in May - the slowest rate it had recorded since August 1996.

In its latest survey, the Halifax said the market was flat with prices having risen just 0.3% in the three months to May. It added that annual inflation was 5.7% - its lowest measure for four years.

Many in the housing industry are now hopeful that the market will see a 'soft landing', rather than a crash similar to the one seen in the early 1990s.

Recent figures from the Bank of England suggested there were signs of renewed strength in the market.

It reported a larger-than-expected rise in net mortgage lending of £7.3bn in April, and also noted that the number of house purchase approvals hit a nine-month high of 95,000.