House price growth turned negative in August, says the latest report from the Royal Institute of Chartered Surveyors (RICS). It says 1.8% more chartered surveyors reported a fall than a rise in house prices.
Demand continued to weaken, the report says, as rising interest rates weighed in on buyer affordability. However, falls did not take place in every region in England: the areas worst affected were the West Midlands, the North West and East Anglia but in London RICS found prices buoyant.
Confidence in household finances also remains strong, while the number of four bedroom houses on the market has declined by 51% year-on-year, most likely because of the August HIPs deadline.
RICS spokesman Ian Perry added: ‘Potential house buyers have become far more cautious as they wait and see what affect interest rate rises will have on household finances.
‘The market will soften further going into the autumn, reducing some impetus from those that have been chasing a rapidly moving target. HIPs have reduced the number of four bedroom family properties coming onto the market, making family homes even more difficult to purchase.’
Kelvin Davidson from Capital Economics said the report indicates buyers are more likely to be cautious: ‘Because of continued problems in the financial markets mortgages are on the rise again. So, even without another interest rate rise, the foundations are certainly in place for the continued moderation in housing market activity levels and price growth that we expect over the remainder of the year and into 2008.’