The Royal Institute of Chartered Surveyors (RICS) has announced that house prices have reached their worst point since the housing market crashed in the early 1990s.
The number of surveyors who reported a significant drop in house prices in January, exceeded those who reported rises by 54.7%. January 2008 was the sixth consecutive month in which falls out-numbered gains.
January saw the highest negative balance since November 1992 when the figure reached 60.1% after increasing for the five months previous. In December 2007 the figure showed was 49.1%, up for 3.1% in August.
A growth of 40% in the average number of unsold properties per surveyor since September has also been reported, this is the largest growth since February 1999. Analysts believe that this survey will spark even more fears of a sharp housing market correction.
The chief UK European economist for Global Insight, Howard Archer, said: “The very weak January RICS survey will heighten concern that the housing market is headed for a sharp correction in the face of stretched affordability and tighter lending practices resulting from the credit crunch.”
RICS has said that the slowing demand for property when contrasted with the lack of supply has caused the rapid price falls, the credit crunch has deterred would-be buyers from entering the market. The fear of rejection for a mortgage applications, unsteady house prices and wavering interest rate are stopping people who are not already on the property ladder, from jumping on during an uncertain market.
The rising number of house repossessions in the UK in recent months because of missed mortgage payments is also a constant worry for people looking to purchase a property. The credit crunch is meaning that people’s money is spread even more tightly than usual across debt repayment and necessities, making it harder to keep up with mortgage payments.
A spokesman for RICS, Jeremy Lead, believed that banks will have to pass on the Bank of England’s 0.25% rate cut to borrowers if demand is to be increased and the market stimulated once again.
He said: “A lack of demand and confidence in the housing market is clearly behind the recent price slowdown. Tightening mortgage lending criteria is a block to many who are keen to take the housing market plunge.
“Agents are finding it difficult to market properties to an audience which has decided to watch the current economic theatre from the wings.”
He continued by saying: “However, if mortgage lenders filter the recent interest rate cuts into the market, demand should begin to increase.
“In the near term, the housing market will continue to be shielded from significant price falls while employment conditions are strong. The market need only fear a significant fall in prices if job losses start to multiply.”
It seems the fate of the property market lies in the hands of mortgage lenders and advisers, to keep the property market above water these companies must adhere to recommendations and Bank of England moves on interest rates. This will keep the market buoyant for lenders, advisers and mortgage lead companies.
The place in the UK that has been hit hardest by falling house prices is Northern Ireland, the balance here is 88%, the North of England saw a figure of 72% and the North West saw the low number of 66%.
Scotland was the only place who managed to avoid the damage, here there were 5% more surveyors reporting losses as opposed to gains. It seems that bonny Scotland is popular as ever with house buyers and the property market continues to boom north of the border.
