House prices drop for second month

17 April 2003
House prices have fallen for the second consecutive month as fears about the war in Iraq and the number of properties on the market increase.

According to the latest survey from the Royal Institute of Chartered Surveyors (RICS), during March prices fell nationally but London, the South East and East Anglia saw larger falls despite the pre-Easter season being seen as a strong period for housing sales.

The number of new buyers entering the market have dropped again due to continued concerns about the health of the economy and the war in Iraq. Meanwhile, the number of people putting their houses up for sales have increased taking the stoke of unsold housing to their highest levels since January 2002.

RICS reported that at the end of March, the average stock of unsold property rose to 70 per surveyor from 64 in February or by 9 per cent, representing the largest monthly rise in percentage terms since September 2000. Despite the relatively large increase for the month, the overall level of stocks are still historically low, and below the long-run average figure of 117 recorded since 1978.

Surveyors reported that the number of completed sales for the first three months of 2003 were down 12 per cent from the last quarter of 2002, and were down 21 per cent compared to the same period a year ago.

RICS housing spokesman Ian Perry commented, 'The national market is undergoing a definite slowdown, which is good news for first time and less well-off buyers in the South, but underlying conditions are not as gloomy as one might think.

'Unemployment and lending rates remain low, and with good Easter weather and the end of the Iraq war in sight, we may have the ingredients for a bounce back in the market later in the year.'

According to the survey, surveyors believe that if the war ends within the next couple of weeks rather than months this would remove some of the uncertainty in the housing market.

Surveyors expect further price falls over the next three months. 48 per cent of surveyors expect prices to decrease rather than go up, while in February's survey 40 per cent of surveyors predicted that house prices would fall.