According to a new report from the Royal Institution of Chartered Surveyors (RICS), house price balance – the percentage of surveyors reporting a rise in prices minus those reporting a fall – for October declined at the fastest pace for more than two years. However, it also shows that limited supply continues to keep the market afloat.
“The housing market is seeing the awaited slowdown that many had been expecting, with modest falls reported across most UK regions,” said RICS spokesman Ian Perry.
House price growth was negative for the third consecutive month according to the report. While 14.9 per cent more surveyors posted a fall than a rise in September, 22.2 per cent more reported a fall in October. The most significant decline was seen in East Anglia, with prices in the West Midlands, the South West, the East Midlands and Wales also showing large drops. London was the only region to show an increase.
Meanwhile, new instructions to sell declined for the fifth month running with 17 per cent more surveyors reporting a fall than a rise in new instructions to sell property. Unsold properties per surveyor rose to 64.9 on average compared with 59.7 in September.
“A decline in transactions may be in the offing as stalemate returns to the market, although a material fall in prices would require a weaker labour market prompting forced sales,” predicts Mr Perry.
“London is the only region where new instructions have risen over the last two months indicating that more leveraged buyers at the margins may already be feeling the credit squeeze,” he added.
Reports indicate that an interest rate cut is still unlikely as the Bank of England has considered the rate of house price inflation to be unsustainable for some time.
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