Page last updated at 23:19 GMT, Monday, 11 August 2008 00:19 UK

'More realism' over house prices

For sale boards
The survey has been published as figures show a dip in mortgage costs

More "realism" has entered the UK housing market, with sellers dropping their asking prices for properties last month, surveyors have reported.

But the number of people moving house still fell to its lowest level since the Royal Institution of Chartered Surveyors' (Rics) survey began in 1978.

Rics said that the squeeze on mortgage availability continued to dampen the UK housing market.

And it added that "confused messages" over stamp duty could hit confidence.

Completed sales

While prices continued to fall in July, surveyors did not report such an overwhelming pattern of declines as they did during the previous two months.

The lack of mortgage finance has brought the housing market to a virtual standstill with first-time buyers rapidly becoming an endangered species
Ian Perry, Rics

There were 83.9% more surveyors reporting a decrease than a rise in house prices in July, compared with 86.9% in June.

But there were just 14.4 completed sales per surveyor on average during the three months to the end of July - a new low and down from June's survey figure of 15.3.

The lull in demand was blamed on the ongoing mortgage squeeze, caused by the credit crunch.

"The lack of mortgage finance has brought the housing market to a virtual standstill with first-time buyers rapidly becoming an endangered species," said Rics spokesman Ian Perry.


A month ago, Rics suggested that would-be buyers were negotiating from a position of strength and could find bargains during a weak market.

House price graph

Now Mr Perry has suggested that sales activity might pick up in the coming months as sellers were starting to re-evaluate asking prices which surveyors considered to be unrealistic.

This could have caused a slower pace of decline in new buyer enquiries shown in the survey for July.

But he said recent speculation that the government might offer a holiday from stamp duty payments and "confused messages" from the government on the issue could damage any returning confidence.

It might also stop people from moving in the short term, he said.

The latest survey's figures date from before the claims surfaced.

Future position

Many more surveyors believe that prices will fall in the next three months than rise.

In England and Wales, this feeling was particularly strong in Yorkshire and Humberside as well as the North.

"We are expecting a very long 18 months before any improvement," said one surveyor in Sunderland.

In London, the South East and the South West, surveyors were not as certain of house price falls. One London surveyor said that the "static market" was being talked down in reports about property prices.

Recent surveys from lenders' data have suggested house prices have continued to drop.

Both the Halifax and Nationwide said that the annual fall in UK house prices to the end of July was just over 8%.

The government's own figures on the state of the property market are expected on Tuesday.

There was some positive news for homeowners on Monday when the Bank of England said that some fixed-rate mortgages became cheaper in July.

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