Confidence in the UK property market at 30-year low

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by Kay Murchie

The gloom in the UK’s property market continues as The Royal Institution of Chartered Surveyors’ (Rics) said confidence in the UK housing market fell last month to a 30-year low.

Rics added that 78% more surveyors reported a fall than a rise in property prices in March - the worst reading published since the survey started in the late 1970s.

Rics warned that the next 6 months would be crucial for homeowners and prospective buyers.

A spokesperson for Rics said the gloom was the result of the credit squeeze and its impact in stopping mortgage providers lending to each other. Sentiment is at a very low ebb and will continue to remain depressed while the economy suffers from this unique liquidity blight, added the spokesperson.

However, Jeremy Leaf of Rics said that a considerable crash in prices is unlikely and buyers with access to large deposits have the opportunity to get buy a property they could not previously aspire to.

The news follows that from mortgage lenders who are announcing similar negative views on UK property prices.

Last week, the latest Halifax house price survey showed that the average home declined nearly £5,000 in value last month. This is a fall of 2.5% and represents the biggest monthly fall since September 1992, when prices fell by 3% in a month.

Prime Minister Gordon Brown met with bank chiefs for breakfast talks this morning at Number 10 to discuss the current housing market crisis.

The PM and the Chancellor, Alistair Darling, are urging mortgage lenders to pass on recent interest rate cuts on to homeowners.

The meeting will be attended by senior executives of Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide and the Royal Bank of Scotland.

The agenda will be all about the housing market, promoting inter-bank lending and the general market conditions.

Furthermore, it was announced yesterday that around 30% of British estate agents could be closing their doors for good. The closures are a direct consequence of the credit squeeze, which experts predict will result in approximately 45,000 repossessions, 20,000 job losses in the City and an increase in mortgage repayments for millions of homeowners.