House prices fell for the second month in a row during August as the number of homes on the market continued to increase, latest figures from the Royal Institution of Chartered Surveyors today show.
Around 32 per cent more chartered surveyors reported price falls during the month than those who saw rises, the highest number since May 2009, RICS said.
The drop in prices was caused by a combination of increased numbers of properties being put up for sale, as well as falling demand among potential buyers.
A balance of 12 per cent of surveyors reported a rise in new instructions to sell a home during the month, although this was down from 33 per cent in July.
At the same time, 17 per cent more surveyors said they had seen a fall in inquiries from potential buyers during the month, the highest level since the beginning of the year.
The easing in the previous mismatch between supply and demand, which was one of the key factors supporting the market during 2009, led to surveyors reporting house price falls in all areas of the country, apart from Scotland.
But RICS pointed out that the gap between supply and demand - a lead indicator of future house price movements -had narrowed for the second month in a row.
The average number of sales per surveyor estate agents remained broadly unchanged at 16.7 during the three months to the end of August.
But 18 per cent more of surveyors expect sales levels to pick up going forward, compared with only 8 per cent in July, as the recent dip in house prices tempts more buyers back to the market.
However, surveyors are less optimistic about prices, with a balance of 38 per cent predicting further falls.
RICS spokesman Jeremy Leaf said: “The latest set of results suggest prices in many parts of the country may be slipping but this does appear to be encouraging hopes amongst surveyors that sales levels could begin to pick up as a result.
“That said, there can be little doubt that the restrictive attitude to the provision of mortgage finance will continue to limit transaction activity in the market.”