The number of chartered surveyors reporting a decline in house prices is at its highest since November 1992 with 49% reporting falls in May. The upturn in buyers’ activity at the beginning of the year has petered out against the backdrop of a slowing economy even though the jobs market remains secure.
New buyer enquiries slipped after remaining stable over past months. Completed sales for May were down 29% from last year, which is a reflection of the market’s fall in the latter half of 2004.
Nevertheless, surveyors anticipate an improvement in sales activity with interest rates near a peak and possibly set to fall. Confidence is at its highest level since last November.
One benefit of a slack housing market is that lettings market activity remains firm as many are inclined to rent homes, waiting to see where the market stabilises before making a decision on whether to buy.
Across the country, only Scotland is still seeing price increases. The most noticeable price falls are in the Midlands and Yorkshire & Humberside, with the pace of falls also increasing in London.
According to RICS housing market spokesperson, Jeremy Leaf: "The froth has come off the market. 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.
"An economic slowdown has led to an element of caution. Nevertheless, expected increases in income and employment growth will provide some underlying support to the housing market while the negative impact of interest rate rises will also fade later in the year."
