April sees ninth monthly rise in number of surveyors reporting overall price falls, but tight supply limits scale of price cuts so far
House sale completions are falling rapidly, shows the latest RICS housing market survey, with an average of just 18.3 sales per surveyor in April - down from 22.2 in March and 26.7 a year ago.
The proportion of UK surveyors reporting a fall rather than a rise in house prices rose to 95% in April - the ninth monthly rise in a row. The figure in March was 79%.
In East Anglia, the North of England and the North-west surveyors were unanimous that house prices are falling. In Scotland, previously the only UK region with prices still rising, more surveyors are now reporting price falls than rises.
However, tight supply has so far limited the actual scale of price cuts. The report said: “The scale of house price falls remains relatively small at this stage compared to past downturns. The lack of new instructions to sell property continues to provide a crutch to the market.”
This could change if “distress sales” start to rise as homeowners get into difficulties with mortgage repayments and are forced to sell, said the RICS.
This has yet to happen, however. “While mortgage arrears remain low and the employment situation remains strong, the lack of supply will continue to prevent large declines,” said the report.
Demand continued to weaken in April, with 68% more surveyors reporting a fall rather than a rise in new buyer enquiries, up from 51% in January.
The RICS said that demand was unlikely to improve, because of lenders' increasingly cautious attitude and interest rate cuts not being passed on fully to borrowers.
Four-fifths of surveyors now expect prices to continue to fall, up from three-quarters in March.
Despite a fall in unsold stock as a result of lack of supply, the ratio of completed sales to unsold property fell to 21%, down from 25%.
RICS spokesperson Ian Perry said:
“Although most surveyors are now seeing price declines, the extent of the fall, is at this stage, quite modest. The real issue is the collapse in the number of housing transactions.
“This has very real implications, not just for the property industry but also the high street and the wider economy. This is a key reason why the Bank of England should act at its next meeting by cutting the base rate.”