The latest survey by the surveyors’ body RICS provides further evidence that the bounce back in house prices is petering out.
The surveyors polled had, on balance, seen house prices rise in June, but when asked for their expectation for the three months coming the balance swayed narrowly towards a fall in house price.
Not that the pattern is even across the UK, the markets in London and Scotland appear fairly buoyant. But in swathes of the north of England and in Wales prices are already on a downward slope and the view of estate agents is that prospects will weaken.
The RICS points to weaker demand and an increase in the number of homes coming onto the market as the main downward driver of prices.
Certainly the data (as seen in the two graphs taken from the RICS survey) point to a sharp increase in new vendor instructions and a slight fading in interest from new buyers.
And the ratio of sales to unsold stocks is also heading south, which tends to be an early indicator of weakening house prices.
Despite the rather gloomy picture painted for sellers, the RICS remains optimistic that the increase in stock coming onto the market may help to bolster the number of overall sales by virtue of providing buyers with more choice.
If this optimism is well founded and property transactions hold or increase, then the impact on house builders of a flattening market might not be that painful.
That said, my feeling is that the performance of house builders in terms of sales will depend very much more on their attitude to pricing. If they set themselves firmly on a path of rebuilding margins and seek to hold or increase prices, we may see the sales of new homes – and hence future new build – slow again.
But for me what I found a bit more unnerving was the note from the Council of Mortgage Lenderswhich suggests that mortgage costs for those borrowers moving home are at an all time low when set against earnings.
This seems hardly the environment for wilting demand and rather begs the question of what happens when mortgage costs start to return to more normal levels.