House prices falling across UK

House price falls are picking up pace with a record number of chartered surveyors reporting a drop in the cost of property during March, figures showed today.

The proportion of chartered surveyors who claim prices are falling hit a new high during the month, with 78.5% more surveyors saying the value of property had dropped, than those who reported a rise, according to the Royal Institution of Chartered Surveyors.

The figure is considerably higher than the 65.7% more surveyors who reported price falls in February, which itself surpassed the historic high set in June 1990 to be the worst figure since the survey began in 1978.

The proportion of surveyors reporting price falls has been rising for the past eight months as the credit crunch continues to take its toll on the market.

The group said the regional picture was "even more depressed", with 89% more surveyors reporting price falls in the East Midlands than those who said there were rises, while a net balance of 86% said property prices were going down in East Anglia.

Surveyors reported that prices fell at a faster pace than during the previous month in all regions of England and Wales, except for Yorkshire and Humberside.

Scotland remains the only area of the UK that is still seeing house price rises, with just 4% more surveyors saying values are still going up there than those who think they are falling, compared with 10% more in February.

But the group stressed that a shortage of homes being put up for sale should prevent a 1990s-style house price crash.

Unsurprisingly, potential buyers are staying away from the market until the outlook becomes clearer, while others are struggling to get the mortgage they need to move.

The number of new buyer enquiries fell for the 16th month in a row during the month and at its fastest pace since March 2003, with 49% more surveyors reporting a fall than those who saw a rise.

RICS said the fact that recent interest rate cuts were not being passed on to new borrowers suggested demand was unlikely to improve soon.

But it added that surveyors had also seen a fall in the number of homes coming on to the market as historically high employment levels meant very few people were forced to sell.

The group said this lack of new supply was preventing significant price falls, with these instead being caused by problems faced by buyers in getting a mortgage.

Surveyors remain pessimistic going forward, with a record net balance of 73% expecting further price falls.

RICS spokesman Jeremy Leaf said: "Sentiment is at a very low ebb and will continue to remain depressed while the economy suffers from this unique liquidity blight.

"The slowdown in prices is directly attributable to a lack of available finance which has hit demand. However, until new supply increases dramatically a significant crash remains unlikely.

"The next six months will be a crucial period for homeowners but would-be buyers with larger deposits may see this market as an opportunity to acquire property in areas to which they could not previously aspire as recently as the end of 2007."

The figures add to the gloomy data on the housing market after Britain's biggest mortgage lender Halifax last week said house prices fell by 2.5% during March, the biggest monthly fall since September 1992.

The housing market has been coming under increasing pressure in recent months due to a combination of the problems in the mortgage market and stretched affordability following previous strong price growth.

The Prime Minister called on lenders at the weekend to pass on the Bank of England's recent interest rate cut to borrowers, while he is due to meet representatives from the major banks today.

Meanwhile, the National Association of Estate Agents (NAEA) called for "steadiness" amongst property market professionals, saying there were still strong economic factors underpinning the market that had not changed.

NAEA chief executive Peter Bolton King said: "No one is denying that the housing market is in a tricky situation but it is important to keep it in perspective and we do need to exercise discretion in the figures.

"The market is battling with the credit crunch, which has undoubtedly had an effect on confidence.

"However, the key factors that underpin the housing market still exist - low unemployment, historically low interest rates and a pent-up demand for houses.

"We can see from the figures that it is not all doom and gloom out there and we need to tread very, very carefully before making long-term judgments on the market at this current, unsettled, time."