Home shortage limits fall
A drop in house prices is being reported by almost every estate agent in Britain but a shortage of homes coming on to the market has so far limited the extent of the fall, the Royal Institution of Chartered Surveyors said today.
The monthly snapshot of the property market from the body representing estate agents found that firms reporting lower prices outnumbered those seeing increases by more than 19 to one in April, despite the spring buying season.
The RICS said that the balance of surveyors registering a fall in prices stood at a seasonally-adjusted 95.1 percentage points last month, the highest since the survey began almost three decades ago and beating the previous record of 79.4 points recorded in March. Interest from potential buyers fell for the 17th consecutive month as the credit crunch caused lenders to restrict the choice of mortgage products and tighten the conditions for getting a home loan.
The tougher climate for borrowers was underlined by Bank of England data yesterday which showed loan rates for some products had risen despite interest rate cuts. The Bank said the average interest rate on two-year fixed mortgages with a loan worth 95% of the property jumped to 6.94% in April from 6.60% in March - the highest since February 2000, a time when the bank rate was 6% compared with 5% today. A two-year fixed mortgage with a 75% loan to value rate rose to 6.08% in April from 5.80% in March and was at its highest since October, when the bank rate was 5.75%.
But amid signs that its members are becoming concerned about the impact on buyer sentiment of stories about tumbling prices, the RICS said that so far the scale of price falls remained small compared with previous downturns. The RICS said that in 10 out of 12 UK regions, falls were concentrated in the 0 to 2% range, although in the south-east and East Anglia there were more declines in the 2% to 5% bracket. In London 18% of surveyors said prices were unchanged over the quarter and 41% said they had fallen by up to 2%.
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