House prices drop as confidence falls

House prices drop as confidence falls

10 August 2010 / by Lois Avery

The housing market has dipped for the first time in a year according to figures from surveyors.

The Royal Institution of Chartered Surveyors’ monthly survey discovered the downturn this month – the first since July 2009.

In July, 25 per cent of surveyors reported falling house prices over the previous three months, compared with 11 per cent saying prices rose.

The sudden dip in the housing market came following the scrapping of Home Information Packs and the more cautious stance from buyers. 
Demand for property also fell for the second month in a row with difficulty in securing mortgages and increased uncertainty about the prospects for the economy contributing to caution from potential homebuyers.

Surveyors’ expectations for house price increases have also turned negative, with 28 per cent more surveyors expecting prices to fall over the coming months, up from six per cent in June.

Despite this, sales expectations remain positive, with eight per cent more surveyors expecting sales to rise rather than fall, although this is down from the previous month.

Commenting, RICS spokesperson, Ian Perry said: "The fall in the RICS house price measure is broadly consistent with most other recent data that has been released. This is a reflection of both the increase in supply following the scrapping of HIPS and the more cautious stance from buyers.

"Significantly, the forward looking price expectations numbers suggest that this softer trend will continue through the second half of the year. However, agents are still generally optimistic about sales activity which should benefit from more realistic pricing of properties."

The news has sparked even more concern about the UK’s economic recovery with Business Secretary Vince Cable acknowledging the threat of a double dip recession.

“The government’s own forecasting risk puts it at something like one in four, one in five,” Mr Cable’s own estimate was “well below 50-50”.

Experts also say that the market is the toughest it’s been in years for first time buyers with the average deposit now reaching the hefty sum of £35,000.

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