House prices decline for fourth month

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House prices have fallen for a fourth month in a row, according to the latest survey from the Royal Institution of Chartered Surveyors.

The RICS yesterday reported price falls across all regions in England and Wales; 41 per cent more chartered surveyors reported a fall than a rise in house prices. Surveyor confidence in house prices reached the lowest level since records began in 1998. Recently the Halifax bank and Nationwide Building Society also said prices had fallen over the past few months.

Market conditions are still having a depressing effect on sentiment, but with the Bank of England's recent cut in base rate,the RICS believes it maysee optimism increase in the coming months. However, the continuing crisis in credit markets, pushing market rates higher andrestricting the willingness of lenders to extend mortgages to less creditworthy customers, may at least partly frustrate theeffects of a cut in thepolicy rate.

Surveyors say that house price growth remained negative for the fourth month in succession but the RICS stresses that supply still remains "tight".

However, the new instructions net balance still remains negative. Some 6 per cent more chartered surveyors reported a fall than a rise in new instructions to sell property. New buyer inquiries improved for the first time in 12 months, but the net balance still remains well below the long-run average.

Some wouldbe-buyers have started to test the resolve of sellers who might be feeling the pinch of successive interest rises but many of these would-be purchasers have been prevented from moving forward by tightening mortgage lending criteria. The balance of newly agreed sales declined at the fastest pace since April 1999 (when the question was first asked by the RICS of its members). The stock of unsold property on surveyors' books jumped by 9 per cent.

RICS spokesman Jeremy Leaf commented: "The recent credit crunch continues to hit confidence in the market. However, while underlying economic fundamentals remain sound and the labour market strong, large falls in prices remain unlikely. Employment would have to fall sharply before enough supply entered the market to create a significant dip. "