UK housing market continues to slow

The British housing market slowed for the fourth month in a row during January, as chartered surveyors warned there could be price falls ahead, a report showed today.

The Royal Institution of Chartered Surveyors said 19% more of its members expected prices to fall over the coming three months than those who expected further increases.

The group added that during the three months to the end of January 21% more surveyors reported a rise in prices than those who reported a fall, down from 41% in December.

It is the fourth month in a row that the number of surveyors reporting price growth in England and Wales has fallen, and January’s figure matches the post-September 11 low reached in November 2001.

The group said prices had fallen in London during the three months, with 45% more surveyors reporting a drop than a rise, the strongest figure for almost nine years.

It added that previous falls at the top end of the market in the capital had filtered down to middle priced homes.

In the South East there were slight falls, with 11% more surveyors saying prices had declined, while growth remained static across the South West, Midlands and East Anglia.

But in northern England and Wales prices continued to increase strongly, though RICS added that if the slowdown in the South spread, values in these regions were likely to plateau later this year.

However, RICS stressed that it did not think the market was heading for a 1980s’ style crash, as low unemployment and interest rates would continue to support it.

Instead, it said surveyors’ pessimism may just be a short-term dip in confidence due to uncertainty over a possible war with Iraq, and if that was resolved confidence could bounce back.

RICS housing spokesman Ian Perry said: “Predictions of a market slowdown appear to have been correct, as the effects of the slowdown ripple out from London.

“Last week’s quarter per cent interest rate cut may steady nerves, but we do not believe at this stage that it will counteract the negative impact of another war in Iraq or the general feeling of economic uncertainty.”

But while price growth slowed, the number of homes being put up for sale jumped sharply in January, exceeding the usual seasonal increase.

RICS put the rise down to people bringing forward plans to sell their home in order to catch the top of the market.

There was also a significant rise in the number of people looking to buy during the month, though RICS members were not confident these new inquiries would convert into sales.