RICS Reports A Slowdown

The Royal Institution of Chartered Surveyors (RICS) has reported that the slowdown of the housing market is becoming more significant. Its October survey of members says that prices in October were down for the third consecutive month, falling more steeply than at any time since July 2005.

The only region where surveyors felt prices were rising well was in London, with all other regions indicating a fall since summer.

RICS spokesman Ian Perry said: “The housing market is seeing the awaited slowdown that many had been expecting, with modest falls reported across most UK regions. Credit market turmoil has yet to put downward pressure on prices in the capital, although prices have now stabilised even here.”

Home unaffordability has risen to record levels as the combination of high property prices and increased interest rates has taken its toll. New buyer enquiries fell for the eleventh month in a row. Demand has been impacted by the factors above, plus the credit crunch and the tightening of lending criteria.

The RICS survey reported that prices were still rising slightly in Scotland, but even Northern Ireland, which has seen great increase in the last year, is now seeing a reversal. In Scotland and Wales 22% more surveyors thought prices were falling rather than rising.

House buyers are getting cold feet when it comes to the crucial moment, with over a third pulling out of purchases at the last minute, as they fear where the market is heading next. Buyers are said by agents to be nervous about predicted property price falls.

Mortgages have been reported to be just as easy to come by as before the summer credit crisis hit for mainstream borrowers, but the number of products on the market has been cut by 40%, so the choice is narrower. Even those who do get mortgage approval are changing their minds. Mortgage brokers John Charcol report and increase of 50% in prospective buyers pulling out at the last moment. Many are worried about falling into the negative equity trap should the value of their new house start to fall