Confidence sinks to lowest for 10 years

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by Kay Murchie

According to the Royal Institution of Chartered Surveyors (Rics), the number of its members recording price falls has increased for the fourth consecutive month, with 40% more reporting a decline rather than an increase in prices. The study is based on surveyors and estate agents’ reports.

Rics said price expectations had reached the lowest level since October 1998 and that newly agreed home sales had fallen at the fastest rate since April 1999.

The influential report by Rics is seen as a key barometer of the property market and was one of the first indicators of the housing crash back in the 1990s.

Last month’s survey showed 40.6% more surveyors reporting a fall in prices in the past 3 months, compared to 23.4% in October. There has been a significant decline since October 2006 when 47.7% more surveyors were reporting increasing prices, by summer this had fallen to 10.8% more reporting rises in July.

Rics said prices fell in all regions of the UK, apart from Scotland. The most noticeable declines were in the East and West Midlands, while London and the South East noted the smallest dips.

The volume of unsold property on agents’ books soared again in November, increasing 8.7% after a 9.7% increase in November.

Howard Archer, chief UK economist at analysts Global Insight, said the very weak November Rics survey will increase fears that the property market is headed for a sharp correction in the face of stretched affordability as well as the tightening lending practices resulting from the credit crunch.