UK RICS house price index hits 18-mth low in October

LONDON: British house prices fell last month at their sharpest pace in a year-and-a-half as a lack of mortgage finance and an uncertain economic outlook deterred potential buyers, a survey indicated on Tuesday, Nov 9.

The Royal Institution of Chartered Surveyors' (RICS) house price index dropped to -49 in the three months to October, below even the most pessimistic forecast in a Reuters poll, from -36 in the three months to September.

New buyer enquiries dropped for the fifth consecutive month, more than offsetting a drop in the amount of new property coming onto the market.

"With both supply and demand falling, transaction activity is set to remain at relatively flat levels for the foreseeable future," said RICS spokesman Jeremy Leaf.

British house prices dropped around 20% between late 2007 and early 2009 before recouping around half their losses over the following 12 months.

Since early this summer there has been renewed weakness, with mortgage approvals and consumer confidence both declining ahead of painful government spending cuts that will begin in earnest next year.

The price expectations balance fell for a fifth consecutive month to -42 from -41, indicating surveyors expected price falls to be sustained.

Nevertheless, there was evidence that falling house prices were deterring people from putting their homes up for sale. The new instructions balance fell to -4 from +22. This was the first fall since January, when icy winter weather contributed to a very low level of supply.

"The drop in new stock coming onto the market could, if sustained, lessen the downward pressure on prices in the coming months," the survey noted. — Reuters