Page last updated at 10:40 GMT, Tuesday, 13 May 2008 11:40 UK

House price falls 'are spreading'

For Sale signs
Surveyors are reporting fewer inquiries from new buyers

The number of UK surveyors reporting falls in property prices has risen for the ninth month in a row.

In the latest survey from the Royal Institution of Chartered Surveyors (Rics), 82% of surveyors saw prices fall in the three months to April.

That figure was up from 66% in March, with all surveyors in East Anglia, and the North and North West of England, reporting price falls.

There has also been a continued fall in enquiries from prospective buyers.

The number of house sales being completed over the past 3 months has fallen significantly said Rics, with an average of just 18 sales per surveyor

"The real issue is the collapse in the number of housing transactions," said Rics spokesman Ian Perry.

Large numbers of distress sales have not yet appeared in the market place
Ian Perry, Rics

"This has very real implications, not just for the property industry but also the High Street and the wider economy," he added.

Slowdown spreads

The likelihood of further house price falls has been highlighted by the Council of Mortgage lenders.

It revealed that mortgage lending to home buyers fell in March to its lowest level for 33 years and that both lending and sales would go even lower in the coming months.

There was also downbeat news from two UK house building firms on Tuesday.

Redrow said the number of reservations so far in 2008 was half that seen the previous year. while cancellations of reservations, which had been running at about 20%, had seen "a marked increase" since Easter.

Rival builder Galliford Try said that its annual profits would be at least 60m, but this was below analysts' estimates of about 77m.

Declining market

The Rics survey, showing price falls more widespread than at any time since 1978, is further confirmation that house prices in the UK are now declining after a decade-long boom.

The survey found that 68% more surveyors noted a fall rather than a rise in new buyer enquiries, compared with 51% in January.

Other surveys, such as those from lenders including the Halifax and the Nationwide, have reported recently that prices are now lower than they were a year ago.

Rics said that regions where prices had still been rising until recently have now been caught up in the general decline.

In Scotland, which had bucked the UK trend, the house price "balance" also turned negative last month.

Small falls

The bursting of the house price bubble has been caused by a combination of prices that had reached unaffordable levels, and the effects of the credit crunch which has caused a sudden shortage of mortgage funds.

However, Mr Perry said the scale of house price falls was still "relatively small" compared with past downturns.

"Large numbers of distress sales - either repossessions or sales from those attempting to avoid the repossession process - have not yet appeared in the market place," he explained.

"While mortgage arrears remain low and the employment situation remains strong, the lack of supply will continue to prevent large declines."

Government figures

Other figures, released by the Department for Communities and Local Government (DCLG) suggest that house prices are still higher than a year ago.

Its survey said that in March, annual property price inflation fell from 6.3% in February to 5.2%.

That pushed up the average house price in the UK to 217,344.

The biggest slowdown has been in Northern Ireland where prices have fallen by 1.2% in the past year, the DCLG said.

In Scotland they have risen by 9.3%, and they have gone up by 5.2% in England and 4.1% in Wales.

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