British housing-market sentiment continued to weaken in January, marking six months of pessimism in the sector, a key indicator showed Wednesday, as the number of surveyors reporting falling home prices increased to a level not seen since the recession in 1992.
The Royal Institution of Chartered Surveyors' UK housing market survey said that the number of surveyors observing declining house prices in January, minus those seeing a rise or no change, increased to 54.7 percent.
That’s higher than the previous month’s reading of 49.1 percent.
"A lack of demand and confidence in the housing market is clearly behind the recent price slowdown," RICS spokesman, Jeremy Leaf said in a statement, adding that tightening leading criteria was also blocking many would-be buyers.
New buyer enquiries slumped in January, according to the data, which fell at their fastest rate since October 2007. The fallout from the near collapse of UK bank Northern Rock has added to the waning interest in buying a property, according to RICS.
Meanwhile, the number of people putting their houses up for sale, or new instructions, fell back into negative territory for January, despite the diminished prospects for sharp price rises.
The key reason for the lack of new properties hitting the market, RICS said, is that many sellers rushed their assets to the market before a final roll-out of Home Information Packs (HIPS) on December 14 2007, which now prove an additional cost to sellers.
One bullish finding from the RICS survey is a slight improvement in surveyors’ outlook over the next six months. The net balance of surveyors expecting a fall in sales eased from -19 to -11 for the period, the survey said.
The Bank of England cut interest rates by 25 basis points on Thursday, for the second time in three months, leaving the base rates at 5.25 percent. The easing monetary policy could stimulate the UK housing market when its effects filter through to the real economy over the coming months, because banks may pass the lower rates on to their mortgage customers.
Scotland bucked the negative trend of declining house prices, where prices were shown to have edged 3 to 7 percent higher.