UK house prices fall for third month in a row

House prices fell for the third month in a row during September as properties flooded on to the market, research indicated today.

The balance of surveyors reporting a rise in new instructions nearly doubled during the month to 22%, according to the Royal Institution of Chartered Surveyors.

The group attributed the jump to homeowners testing the water ahead of the British government's spending cut announcement, or trying to sell their property before a further deterioration in the economy.

But the rise in sellers, was not matched by an increase in buyers, as people continued to sit on their hands to see how the market develops, while mortgage finance also remained tight.

Around 2% more surveyors said they had seen a fall in new buyer enquiries than those who saw a rise, although this was down from a balance of 17% of surveyors who reported a fall in buyers in August.

Unsurprisingly, given the rise in properties being put up for sale and the ongoing shortage of buyers, house prices continued to fall, with 36% more surveyors reporting a drop than those who saw a rise, up from 32% more the previous month.

However, around half of respondents said they thought house prices had been broadly stable.

Surveyors expect further price falls going forward, with a balance of 41% expecting the cost of property to continue declining, the highest level since March last year.

RICS spokesman Ian Perry said: "The fresh influx of property to the market combined with a lack of buyers remains the key problem affecting the sector.

"First-time buyers are in particularly short supply as the high deposits required by lenders prevent them from taking their first steps on the property ladder. Without sufficient demand property prices continue to slip back.

"However, many areas are reporting a correction rather than dramatic falls in prices and vendors who are prepared to be realistic with pricing are still able to achieve a sale. It's very much a buyer's market at the moment."

Surveyors are no longer reporting a fall in sales, while 11% more expect transaction levels to rise rather than drop going forward.

The North saw the biggest jump in property coming on to the market during September, with London, the South West and Yorkshire and the Humber all also reporting strong rises in seller numbers.

Scotland was the only region where surveyors reported seeing price rises during September.

The East Midlands saw the biggest drop, with a balance of 61% of surveyors reporting a fall, while 45% more surveyors saw price falls in Northern Ireland than those who saw rises.

The figures come the week after Halifax said house prices dived by 3.6% during September, the biggest fall it has ever recorded.