House prices declined for the second month in a row in September, according to the Royal Institute of Chartered Surveyors (RICS), while first time buyers enquiries also continued to drop. 14.6% more surveyors reported a drop in prices rather than a rise for September ? 3.3% more surveyors than reported a fall in August.
New buyer enquiries also fell for the tenth consecutive month, says RICS, as the interest rate rises continue to bite, and the tightening of lending criteria continues.
‘The combination of rising interest rates, the introduction of home information packs and volatility in the financial markets has certainly affected the confidence of lending criteria. As a result some would-be buyers are turning to the rental market,’ said Jeremy Leaf from RICS.
However, RICS is of the opinion that, with a strong underlying economy and interest rates likely to fall once more, the market remains quite secure. With supply falling alongside demand, house prices, particularly in London and Scotland remain healthy, although falls were recorded in Yorkshire, Humberside, the south east, south west, north east and north west.
‘This data supports the evidence from other indicators that declining buyer confidence, reinforced by tightening credit conditions and interest rate rises earlier in the year, is weighing on house prices, said Brigid O’Leary from Capital Economics.
‘However RICS data need to be interpreted with care. In 2004/05, the past prices balance was negative for 15 months without annual house price growth on the main measures turning negative,’ she added.