House market shows more signs of cooling

The Royal Institute of Chartered Surveyors (RICS) has said today that the housing market showed more signs of weakening in the first quarter of the year.

The RICS market survey for England and Wales reveals a weakening market as average house prices fell for the second month running with the available supply of property rising.

Buyers "remain cautious" say the RICS and are awaiting the end of the Iraq war and surveyor confidence is negative for the next three months.

For the three months to March, 25% more surveyors reported falling prices than rising on a seasonally adjusted basis compared to 9% in February. Unadjusted actual prices were down only very slightly. According to the survey, price rises were only apparent in the North, Yorkshire and Humberside and Wales.

Also, completed sales fell in the first three months of the year to their lowest level for two years on a seasonally adjusted basis.

Although surveyor confidence in sales prospects remains negative, the downturn in confidence is, says the RICS, "surprisingly fairly limited" in view of much weaker buyer enquiries, continuing uncertainty over the economic outlook and the duration of the Iraq war.

Price outlook confidence deteriorated further in March hitting a new survey low on a seasonally adjusted basis with 48% more surveyors expecting prices to fall than rise in the next three months.

On a seasonally adjusted basis 66% more surveyors reported a fall in buyer enquiries than a rise in March. New enquiries have dropped sharply since January with February's interest rate cut scarcely offsetting weak demand conditions.

However new instructions rose for a third consecutive month, though the pace of increase has tailed off sharply since January.

Among the mortgage lenders, the Nationwide posted the most optimistic quarterly data, claiming prices had risen by 3.9% in the first quarter of 2003, 6.7% down on the fourth quarter of 2002.

The Halifax said that prices had risen by 1.1% in March with the number of properties coming on to the market continuing to increase.

(GMcG)