The outlook for UK housing improved slightly in June, but a sharp downturn in the economy could see the foundations of the British real-estate market start to crumble, the Royal Institute of Chartered Surveyors said Tuesday.
Sentiment edged higher for the second consecutive month, RICS said, as a lack of forced sales helped home owners hope for an end to falling house prices, but a sharp rise in unemployment and repossessions could send prices tanking.
The net balance of surveyors reporting falling rather than rising prices improved to 88 percent from 92.2 percent in May on a seasonally adjusted basis, which indicated better morale, RICS said.
However the market stalemate remained as buyer enquiries and new instructions continued to slump, the June data showed, meaning house prices were likely to keep edging lower as a result.
The average asking price of a UK property fell 1.2 percent in June from the previous month to 239,564 pounds ($473,522), according to the Rightmove House Price Index, which bought the annual price rise to just 0.1 percent.
The number of potential buyers has been sharply reduced since the onset of the credit crunch last summer due to tighter lending standards from mortgage brokers, higher borrowing rates and a drought of funding for first-time buyers.
Many of those able to source capital are further put off from stepping into the market because of the widely held expectations of further declines, coupled with a reluctance of sellers to cut their asking prices. Rightmove's June data does show some concessions are starting to be made by sellers, who are easing their price expectations.
Hopes that the tough conditions would be eased by the Bank of England were dashed last week as the central bank kept interest rates on hold at 5 percent. Above-target inflation is jockeying for the BoE's attention, along with signs of increasing economic weakness.