Chartered Surveyors reported that house price growth remained negative for the fourth month in succession - but new buyer enquiries improved for the first time in 12 months, according to the November UK housing market survey from the Royal Institution of Chartered Surveyors (RICS).
The RICS house price balance almost halved in November. 40.6% more Chartered Surveyors reported a fall than a rise in house prices, down from 23.4% in October - the most negative since May 2005 when 49% more Chartered Surveyors reported a fall than a rise.
However, the net balance of new instructions still remains negative. 6% more Chartered Surveyors reported a fall than a rise in new instructions to sell property up from 17% in October. Supply has started to loosen somewhat but a strong labour market means that those at the margins still remain confident of maintaining stable household finances.
New buyer enquiries improved for the first time in 12 months but the net balance still remains well below the long run average. 31% more Chartered Surveyors reported a fall than a rise up from 41% in October. Some would-be-buyers have started to test the resolve of sellers who might be feeling the pinch of successive interest rises but many have been prevented from moving forward by tightening mortgage lending criteria. In fact, the balance of newly agreed sales declined at the fastest pace since April 1999 (when the question was first asked). 36% more Chartered Surveyors reported a fall than a rise in newly agreed sales.
Sustained weakness in demand, combined with loosening supply conditions is resulting in greater stocks of property on surveyor's books. The stock of unsold property on surveyor's books jumped by 8.7%, following last month's rise of 9.7%. As a result, the ratio of completed sales (over the last three months) compared to the stock of unsold property on the market fell to 33.1%. Market conditions are now the loosest they have been since October 2005.
Surveyor confidence in house prices reached the lowest level since records began in 1998. Market conditions are still having a depressing effect on sentiment but the recent interest rate cut, may see optimism increase in the coming months.
Surveyors reported price falls across all regions in England and Wales. This was particularly visible in the East and West Midlands. In Northern Ireland, surveyors reported broadly based price declines. Scotland was the only region in the survey where surveyors reported a positive trend in house prices.
RICS spokesman, Jeremy Leaf, said: "It is clear that the housing market continues to feel the strain of depressed market conditions. The recent credit crunch continues to hit confidence in the market, with Chartered Surveyors feeling the most pessimistic about price expectations since 1998. However, while underlying economic fundamentals remain sound and the labour market remains strong, large falls in prices remain unlikely. Employment would have to fall sharply before enough supply entered the market to create a significant dip. "
