RICS report blames rising interest rates and HIPs for insercure market

House prices in the UK fell for the second successive month in September, according to the latest RICS survey.

The UK housing market survey published today found that demand is slowing but supply remains very constrained.

House prices fall

Jeremy Leaf, RICS spokesman, said: “Although house prices continue to fall, the underlying economy remains strong.

"A major correction in the market seems unlikely while economic growth is above trend and employment conditions remain buoyant.”

Around 15% more surveyors reported a fall in house prices, down from a little over 3% in August. This is the fastest decline since September 2005.

New buyer enquiries declined for the 10th consecutive month and at the fastest pace since March 2003.

New instructions declined for the fourth consecutive month at the fastest pace since June. The report found that while the real economy remains fundamentally sound, vendors are under no pressure to sell.

London, however, whose economy is heavily geared towards the financial services sector, was the only region in the survey to experience a rise in instructions.

Scotland saw the strongest price growth. The largest price falls were reported in East Anglia, Wales and in the Midlands. Smaller falls were reported in the South East, South West, Yorkshire and Humberside and the North West.

The RICS blamed the rise in interest rates and related financial markets issues depressing surveyors’ outlooks. The introduction of home information packs (HIPs) also had an effect.

Leaf said: “The combination of rising interest rates, the introduction of HIPs and volatility in the financial markets resulting in tightening of lending criteria, has certainly affected the confidence of buyers and sellers.”

He said as a result, some would-be buyers are turning to the rental market.