North-south housing divide grows

The property market showed signs of improving last month but prospects for house prices in the south of the country appear far stronger than in northern regions.

The number of surveyors reporting house price falls dropped for the fourth consecutive month to a balance of 26% - the lowest level since July last year, according to the Royal Institution of Chartered Surveyors (RICS).

But 12% of respondents said house prices actually rose in February, while more than half said they were unchanged. Even among surveyors who did see price falls, the majority said they were in the 0% to 2% range.

The number of new buyers entering the market also stabilised after falling during the second half of last year, new instructions edged up, and the number of sales agreed was unchanged, after falling during the previous four months.

Overall, the average chartered surveyor estate agent branch sold 14.8 properties during the three months to the end of February.

But there are strong regional variations in the property market, with a balance of 14% of surveyors in London reporting price rises, while the South East had the lowest balance of surveyors who saw falls, at 16%.

At the other end of the spectrum, 58% more surveyors said house prices in Wales dropped during February than those who thought they rose, and in Yorkshire and Humberside a balance of 51% reported falls, as did 46% in Northern Ireland.

There were also falls in the number of new sales agreed in the East of England, the East Midlands and Wales, with surveyors continuing to report a lack of buyer confidence.

RICS housing spokesman Jeremy Leaf said: "Despite the more positive picture for some parts of the UK, the general mood is still a little flat.

"Broad trends in the survey indicate an increasing variation in the housing market across the UK, with London - and to a lesser extent the South East - operating in a very different orbit.

"Rather ominously, we have probably yet to feel the full impact of the public spending cuts, which are likely to lead to further divergence in the regional property market."

Twelve per cent more surveyors expect sales to rise than those who think they will drop, although a balance of 28% expected prices to continue falling, with London the only region to buck this trend.