Property market suffers biggest slowdown in 2 years

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by Kay Murchie

According to many estate agents, the property market is at its slowest since July 2005 with prices plummeting in several parts of the UK.

A net balance of 22.2% more of its members are reporting price falls rather than increases according to the Royal Institution of Chartered Surveyors (Rics) – the greatest negative ratio in over 2 years.

The Rics report published this week comes after a study by the Government showing that property prices fell in 5 out of 12 areas of the country in September.

Figures from estate agents is especially concerning as it gives the first signs from the high street that prices are plummeting. Furthermore, reports show that the long-expected property market slowdown has finally started as predicted by many experts.

According to figures from the Department for Communities and Local Government (DCLG), prices falls occurred in the East of England, the West Midlands, the North West, Scotland and Northern Ireland.

Howard Archer, the chief UK and European economist at Global Insight, said information from the Government added to the overall impression that housing market activity and prices are now losing significant momentum in the face of slowing activity, increased affordability pressures and tightening of lending criteria.

David Stubbs of Rics said the slowdown in the UK housing market is clearly under way. With interest rates at 5.75% and the impact of the credit crunch reducing mortgage lending options from many prospective buyers, the slowdown in both activity and price growth is hardly surprising.

Mr Stubbs added that banks and building societies have stopped high-risk loans, where buyers can borrow 100% of a property’s price and several mortgages which allow people to borrow 6 or 7 times their salary.