Winter weather freezes housing market

The winter weather put a freeze on the housing market during January as buyers and sellers put their moving plans on hold, research showed today.

The Royal Institution of Chartered Surveyors recorded its first drop in inquiries from potential buyers for 14 months during January, while the number of new sellers fell for the first time in seven months.

Overall, 20% more surveyors reported a drop in new househunters than those who saw a rise, down from 18% more who reported a rise in inquiries in December.

At the same time, a balance of 5% of surveyors said the number of people putting their home on the market fell, down from 15% who had seen an increase in sellers during December.

The bad weather had a dampening effect on the level of new sales agreed, falling to an average of 18 per chartered surveyor estate agent during the three months to the end of January - down from 19 during the previous three-month period and the first drop for 10 months.

But despite the slowdown in activity, house prices continued to rise, with 32% more surveyors reporting price increases in January than those who saw falls, up from 30% more in December.

Surveyors remain confident that the dip in activity is temporary, with the proportion who expect prices to continue rising doubling during the month from a balance of 12% to 24%.

There was an even bigger increase in the number of surveyors expecting sales to rise during the coming three months, rising from a balance of 7% in December to 24% in January.

RICS spokesman Ian Perry said: "The cold snap in January clearly has a huge impact upon both supply and demand in the housing market with activity coming to a halt amidst the seasonal chaos.

"Activity and interest is likely to pick up in the coming months as the market experiences a spring bounce.

"House prices are likely to rise in the short term but if more supply continues to come onto the market, it is possible that the market will run out of steam in the latter part of the year."

The housing market recovery continues to be strongest in London, the South East and the South West.

In Wales, Yorkshire and Humberside and the North more surveyors are still reporting price falls than those who are seeing price rises.

Seema Shah, property economist at Capital Economics, said: "January's fall in new buyer inquiries and agreed sales may well be a temporary, weather-related blip.

"That said, we suspect that there will be further weakening in demand over the coming months as further falls in employment, lacklustre economic growth and the looming fiscal tightening take their toll on buyer confidence."