Further evidence of house price falls

The balance of chartered surveyors reporting house price falls increased even further last month but tight supply has limited the decline, according to the Royal Institution of Chartered Surveyors (RICS).

The RICS house price balance dropped for the ninth month in succession in April. Over 95% more chartered surveyors reported a fall than a rise in house prices, an increase from 79.4% in March.

The regional picture is even more depressed with surveyors in East Anglia, the North and North West unanimous that house prices are falling. The net balance in Scotland turned negative - previously it was the only UK region where the majority of surveyors were reporting house price increases.

However, the scale of house price falls remains relatively small at this stage compared to past downturns. The lack of new instructions to sell property continues to provide a crutch to the market. According to RICS, large numbers of distress sales (either repossessions or sales from those attempting to avoid the repossession process) have not yet appeared in the market and, while mortgage arrears remain low and the employment situation remains strong, the lack of supply will continue to prevent large declines.

RICS spokesperson Ian Perry said: “Although most surveyors are now seeing price declines, the extent of the fall is, at this stage, quite modest. The real issue is the collapse in the number of housing transactions. This has very real implications, not just for the property industry but also the high street and the wider economy."

Peter Bolton King, chief executive of the National Association of Estate Agents, said: “The report reflects our own take on the market. The house prices falls that are taking place are modest and the picture is still patchy with some areas of the country finding it tougher than others.

“There is no denying that the credit crunch has affected confidence in the market – especially first-time buyers who are finding it hard to find financing to get on the ladder. But it is still important to remember that the underlying factors that support the property market remain: low unemployment, historically low interest rates and a pent-up demand for houses.”