The negative balance of chartered surveyors reporting falling prices has hit an 18 month low in a sign of accelerating decline in the market, according to the latest Royal Institute of Chartered Surveryors UK Housing Market survey.
Around 49 per cent more chartered surveyors think prices are falling, compared to 36 per cent in September. The seasonally adjusted figure is the lowest since April 2009.
New buyer enquiries dropped for the fifth consecutive month with the net balance weakening to -12, from -2.
And instructions to the market, which have been rising near consistently since July last year, saw a sharp reversal, with a net balance of -4 per cent recorded in October, compared to +22 per cent in September.
RICS spokesperson Jeremy Leaf said: “With both supply and demand falling transaction activity is set to remain at relatively flat levels for the foreseeable future. Agents may be cautious about what this could mean for house prices in the short term, but dramatic falls are likely to be limited by a gradual drying up of stock coming to the market.
“It is also worth noting that a subdued housing market is not good news for an economy which requires a high degree of mobility to take advantage of job opportunities.”
The East Midlands and East Anglia recorded the most negative price balances, while in Scotland the price net balance moved into negative territory for the first time in over a year.
The average number of stocks on surveyors’ books fell to 67.2, down from 69.1. Completed sales fell to an average of 15.2 per surveyor, the worst reading since June 2009.
RICS claimed the figure highlighted the failure of transaction activity to benefit in a meaningful way from either from the current stamp duty holiday or the stronger than expected GDP data over the past couple of quarters.
Reflecting this, the sales to stock ratio also fell to its lowest level since July 2009. Respondents to the survey report that the market is generally cautious, with many buyers signalling that they are going to wait until the spring to make a decision.
The survey follows signs that the housing market has been in decline for months. The Halifax and Nationwide house price indices are pointing to declines of more than 1 per cent in the three months to October.
However contrary to RICS warnings, new research from moneysupermarket.com released yesterday found the number of mortgages available for first-time buyers has increased by more than a fifth since the start of the year as banks gradually loosen their lending criteria.
There has been a 22 per cent increase in the home loans that lenders make available to people buying their first home since January, with 1,647 different deals now on the market, according to the price comparison site.
The biggest increase has been in the availability of deals for people with a 20 per cent deposit, with these soaring by 76 per cent since the start of the year.
First-time buyers who need to borrow 85 per cent of their home’s value have also seen a big increase in choice, with the number of different deals available rising by a third to 280, while there has also been a 51 per cent rise to 169 mortgages for those with just 10 per cent to put down.
But banks and building societies remain reluctant to lend money to people who have only a 5 per cent deposit, with the number of mortgages available at this level increasing by just one since the start of the year to 10.
Meanwhile research from Rightmove published yesterday indicated that house price falls were attracting more first time buyers.
Around 26 per cent of people who hope to buy their first property during the coming year are first-time buyers, up from a low of 22 per cent in July, according to the property website.