House prices continued to edge lower during April as sellers returned to the market but demand from buyers remained muted, research indicated today.
The supply of property for sale increased during the month as homeowners made the most of the traditionally busy spring period to put their property on the market, according to the Royal Institution of Chartered Surveyors.
A balance of 18% of surveyors reported a rise rather than a fall in new instructions, up from just 4% more who saw a rise in March, as tentative signs that property prices may have stabilised also acted as a trigger to sellers.
Demand from potential buyers also showed signs of improving, as the good weather led to an increased number of viewing in many parts of the UK.
But despite the number of surveyors reporting a fall in interest from potential buyers being matched by those who saw a rise, lifting the balance of new enquiries out of negative territory for the first time in 10 months, the group said a lack of mortgage finance was still holding many people back.
It added that only those who were cash-rich were really able to take advantage of the current market.
Michael Newey, RICS housing spokesman, said: "The return of sellers to the market is positive, but activity still remains subdued and it is difficult to see it picking up materially over the coming months.
"Although there are signs that some lenders may be reducing their grip on the purse strings, in particular with mortgages aimed at first-time buyers, there is still a long way to go before lending levels increase enough to have any real impact.
"Economic uncertainty may also continue to weigh on sentiment for a while to come."
The ongoing mis-match between supply and demand continued to put pressure on prices, with 21% more surveyors reporting price falls than those who saw rises, although this was the lowest level since June last year and 82% of surveyors reported falls of between 0% and 2%.
House prices are expected to continue falling going forward, with a balance of 18% of surveyors predicting further drops.
But they were more upbeat about sales, with 11% more surveyors expecting the number of homes changing hands to increase, than those who thought they would fall.
This followed a rise in the average number of sales agreed per chartered surveyor estate agent to 15.2 during the three months to the end of April, although this was still well down on the long-term average of 26.5.
London continued to buck the national trend, with surveyors in the capital reporting price rises, while those in all other areas of the country saw falls.
The research comes the day after Halifax said house prices had fallen by 1.4% during April, although Nationwide reported a more moderate decline of 0.2% for the same month.
Ed Stansfield, chief property economist at Capital Economics, said: "The slight moderation in the pace of house prices falls, reported by the RICS in April, remains heavily dependent on developments in London, and it does little to change the picture of a very depressed and fragile market.
"There is little evidence that mortgage market conditions are easing. In any case, consumer confidence has been depressed by the uncertain economic outlook and the growing squeeze on household incomes.
"Both factors suggest that the downwards pressure on house prices is likely to build as the year progresses. We expect house prices to fall 5% in 2011 and to continue falling in 2012."
Meanwhile, separate research from property website Zoopla suggested 37% of homeowners trying to sell their property have reduced their asking price at least once, slashing it by an average of £18,970 or 7%.
The group said it was the biggest discount to asking prices it had recorded for more than a year, and £2,500 more than the amount frustrated sellers knocked off their original price last summer.
There is a marked north/south divide, with sellers in northern regions reducing their prices more often and by more than those in the south.
Nine out of the top 10 areas which have seen the biggest reductions are in the north, with Bolton leading the way, with average reductions of 8.5%, followed by Rotherham at 8.4%, and Newcastle and Huddersfield, both at 8.2%.
In Doncaster 46% of properties on the market have had their price reduced at least once, as have 45% of homes in Wolverhampton, and 43% in Stockport, Birmingham and Chelmsford.
At the other end of the scale, only 29% of sellers in Chorley in Lancashire have altered their original price, while those in Croydon have made the lowest reductions at an average of just 6%.Reuse content