Buyers put off by fear of new rate rise

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by Kay Murchie

A range of indicators tracked by the Royal Institution of Chartered Surveyors (RICS) deteriorated in July, with surveyor confidence in sales numbers turning negative for the first time since March 2003. The survey established that potential buyers are anticipating the interest rate rise to 6% next before the end of 2007.

The survey recognised that prices increased quicker than that of the previous month. Enquiries from new buyers declined at the quickest rate since August 2004.

More surveyors anticipated a decline in sales over the coming 3 months than expected a rise. Surveyor confidence in prices was also negative - at the lowest level since June 2005. The survey reported that confidence is negative in all regions apart from London.

London surpassed the rest of England with strong price rises. They also increased significantly in Northern Ireland, but other regions suffered. Property price growth halved in Scotland and was negative in most English regions and Wales.

A spokesperson for Global Insight, the provider of economic and financial analysis, commented that the overall feeling is that the housing market has peaked and is slowing primarily due to high interest rates and inflated house prices.

Capital Economics expect the repossession rate to increase again in 2007 due to rising capacity pressures and high money supply growth. The company anticipate property price growth to be weaker by the end of 2007.