Downturn for house price growth

House price growth finally changed direction for the first time since October 2005, as property prices began to fall in many areas of the country, the latest housing market survey from the Royal Institution of Chartered Surveyors (Rics) has revealed.

With higher interest rates and market volatility, demand continued to weaken throughout August, particularly in the West Midlands, the north-west and East Anglia.

During the month, 1.8 per cent more chartered surveyors reported falls rather than rises in house prices, although London has yet to be affected by the credit market situation and continues to show the strongest growth in England.

Ian Perry, a spokesman for Rics, said: “Potential house buyers have become far more cautious as they wait and see what affect interest rate rises will have on household finances. Affordability is at its most stretched in over a decade and many will worry that rising mortgage repayments will prove a step too far.

“The market will soften further, going into the autumn, reducing some impetus from those that have been chasing a rapidly moving target.”

According to a recent report from the National Association of Estate Agents, the introduction of Home Information Packs (Hip) for three-bedroom properties is likely to lead to a similar decline in the number of these properties on the market as that which was seen after the introduction of the four-bedroom Hip.

Tags: spokesman, three-bedroom properties, month, house price, growth, Chartered Surveyors