13th October 2010
In line with recent trend, the Royal Institute of Chartered Surveyors' latest monthly survey of the sector found more of its members (44% in total) reporting falling rather than rising prices. On a positive note, about a half of those surveyed deemed prices "broadly stable", with only 6% reporting an increase.
More sellers came on to the market in September versus the previous month as they looked to test selling conditions against a backdrop of growing uncertainty over the outlook for the UK economy.
The increased supply of property for sale – up on average by 1.9% per surveyor – continues to act as a drag on prices, says RICS. Average sales per surveyor, meanwhile, remained constant at 16.7 during the month.
Regionally, the North saw the biggest leap in new instructions, while London, the South West and Yorkshire and The Humber also reported large increases in seller activity.
Demand for property, meanwhile, remains "subdued", says RICS, with buyers continuing to struggle to find mortgage finance, or waiting to see what will happen to the market over the coming months.
The imbalance between supply and demand means prices continue to edge lower, with 36% more surveyors reporting a fall rather than rise in house prices in September, down slightly from the month before.
Expectations for prices also fell, with 41% cent more surveyors anticipating prices to fall rather than rise, the lowest level since March 2009.
Ian Perry, RICS spokesperson, says the fresh influx of property to the market combined with a lack of buyers remains the key problem affecting the sector. He adds: "First time buyers are in particularly short supply as the high deposits required by lenders prevent them from taking their first steps on the property ladder. Without sufficient demand property prices continue to slip back. "
The plight of first time buyers is considered in this Guardian blog.
RICS assessment on demand overall was echoed by the Council of Mortgage Lenders, which reported an 8% drop in home loans approved for home buyers to 51,600 during August versus the previous month. Versus the same period last year though, mortgages were slightly up, 3%.
The CML survey also found that first-time buyer loans fell 3% by number, but rose 5% by value, compared with August last year.
Deposit criteria for first-time buyers has varied a little on a monthly basis throughout the year to date, and appears to have eased again a tad in August.
First-time buyers in August put down on average a 21% deposit, compared to 24% in July.
CML director general Michael Coogan notes that August is a traditionally slow month for mortgage lending and it was no different this year.
"We expect a quiet market to continue for the foreseeable future.
"While we do not know what the impact of the comprehensive spending review will be on our sector, it will clearly contain austerity measures that will likely further dampen consumers' appetite to borrow. "
Coogan expects lending to slow more significantly, year on year, heading towards the end of the year.
He adds: "It is unlikely that the uncertain environment will encourage a tick up of mortgage activity in 2011.
"With some uncertainty surrounding future house price trends, we would expect a muted market in the next few years.
"The problem of excess capital, that led to record lending and borrowing in 2007, has self corrected and will not return."