RICS report shows steep property price fall

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by Kay Murchie

A recent report by The Royal Institution of Chartered Surveyors’ (Rics) showed a shock increase last month in the amount of its members recording a fall in property prices.

Consequently, the property market could be in a much worse condition than initially believed as the figures show prices falling at their fastest rate since September 2005. According to Rics, the decline noted last month was the fastest decline for 2 years when 19.4% more surveyors reported seeing a drop in the cost of property than those who noted an increase.

Rics had anticipated releasing similar figures to that of the August report but the shock decline in prices has resulted in fears that the Northern Rock problems has affected confidence in the economy, particularly in property and mortgages.

Enquiries from prospective buyers suffered their biggest decline for 3 years last month. The September report from Rics showed the amount of people looking to purchase a house fell for the 10th consecutive month and at its fastest rate for over 4 years.

Rics surveyors are pessimistic about the future for both prices and buyers going forward with expectations for house price growth reaching the lowest level since May 2005.

In addition, the group has noted a decline in the number of properties coming on to the market. New instructions have declined for the fourth consecutive month.

A spokesperson for Rics said 5 interest rate hikes, the launch of Home Information Packs and the global credit crunch has affected the confidence of buyers and sellers and as a result are turning to the rental market.

During September, the larger price falls were noted in East Anglia, Wales and the Midlands. Smaller falls were seen in the South East, South West, Yorkshire and Humberside and the North West. London and Scotland were the only areas to buck the trend.