House Prices Keep On Falling

The trend of falling house prices appears to be gathering pace.

Great news for would-be buyers everywhere. The latest housing market data reveals house prices are falling in all regions across the country. Even London, which experienced the strongest house price growth over the summer, has fallen into decline.

That's according to the newly published UK housing market survey from the Royal Institution of Chartered Surveyors (RICS) which reveals sentiment has deteriorated yet again. The results first turned negative in August and have declined further every month since. The index now shows 41% more surveyors reporting falling rather than rising house prices in the three months to November.

These are the most pessimistic results since May 2005 as the trend of falling house prices shows little sign of abating. Surveyors are gloomy on their expectations for prices in all parts of the country going forward, with confidence falling to the lowest level since the survey began.

What's more, the level of newly agreed sales is dropping at the fastest pace since April 1999. New enquiries from buyers have also taken a heavy fall while new instructions to sell property dropped for the sixth month running.

A lack of confidence in the housing market has led to weakening demand for property. Many would-be buyers are uncertain where house prices will head next year and are holding off as a result.

Even worse, the global credit crunch has also taken its toll on the UK housing market with many potential buyers unable to find a willing lender. Lending criteria have generally become more stringent excluding scores of prospective borrowers from mainstream mortgage financing. Meanwhile first-time buyers continue to struggle to get on the property ladder at all, as prices remain unrealistically high relative to wages.

Where next for the housing market?

Well, it's hard to be sure, but this month's base rate reduction could go some way to stimulating the flagging housing market.

Moreover, affordability may look up over the coming months as the country's two largest mortgage lenders, Halifax and Nationwide, have already lowered rates in response to the Monetary Policy Committee's (MPC) quarter point cut last week. This could lead to renewed activity but it looks like further reductions may well be needed for a lasting impact.

More: Why The Next Housing Crash Will Be Worse! | House Prices Look Fragile.

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