Buyers' strike jolts housing market, say chartered surveyors

The housing market was hit by a buyers' strike last month as transactions fell and the stock of unsold properties hit the highest level for almost three years, a new survey showed today.

The report, from the Royal Institution of Chartered Surveyors, is the latest to raise fears that the housing market has stagnated.

Completed sales recorded by surveyors have fallen more than 20 per cent over the last year, to the lowest level since December 2000, the Royal Institution of Chartered Surveyors said. Meanwhile, the number of unsold properties on the surveyors' books has surged by 34 per cent over the last 12 months to hit its highest level since September 2000. The stock of properties on the market has risen steadily this year, coinciding with a collapse in the number of new buyers entering estate agents' offices.

Prices fell for the third month in a row according to the RICS survey, which found that the number of surveyors reporting falling prices outnumbered those witnessing price rises by 12 per cent in June.

The survey echoes a report over the weekend from the Ernst & Young ITEM forecasting unit, which warned of "real stagnation" in the housing market. It said the number of people moving home had fallen to its lowest level since 1996, when the market was still recovering from the aftermath of the early 1990s crash.

"We are now seeing real stagnation in the UK housing market," said Professor Peter Spencer, the unit's economic adviser. "There is still some growth outside the South-east but within the M25 house prices are falling, despite the exceptionally low interest rate level."

Anecdotal evidence from surveyors who took part in the RICS report showed a very mixed picture on levels of prices and transactions.

In the South-east, where the RICS reported a large jump in unsold properties, surveyors said the market had weakened. "Buyers [are] cautious and very wary of paying what they perceive to be too much," said Harry St John of Cluttons' Oxford branch. But in Wales, where the RICS said the number of unsold properties had fallen, agents reported an upturn.

However, the RICS said it believed the market would stabilise, noting that the number of new buyers had risen for the first time this year. "Surveyors have interpreted the modest upturn in buyer inquiries positively, expecting some rebound in sales activity in the months ahead," it said.