Rics: Housing sentiment falls to all time low

Sentiment in the UK housing market has fallen to the lowest level on record, according to the latest housing market survey from the Royal Institution of Chartered Surveyors (Rics).

The number of surveyors reporting a fall rather than a rise in property prices during March fell to 78.8 per cent – the lowest level recorded since Rics began collecting data in January 1978.

This shows a sharp deterioration from the level of 65.7 per cent of surveyors reporting a fall rather than a rise the previous month.

According to Rics, falls in the price balance are being driven by weaknesses in the demand for property, reflecting a lack of credit rather than new supply coming into the market.

Mortgage lending has been sharply curtailed during 2008, with the credit crunch making wholesale finance difficult to obtain, restricting retail mortgage availability.

"Sentiment is at a very low ebb and will continue to remain depressed while the economy suffers from this unique liquidity blight," explained Rics spokesmen Jeremy Leaf.

"The slowdown in prices is directly attributable to a lack of available finance which has hit demand. However, until new supply increases dramatically a significant crash remains unlikely."

Rics finds new buyer enquiries declined for the sixteenth consecutive month - at the fastest pace since March 2003 – with the net balance of surveyors reporting a drop in the number of new buyer enquiries now stands at minus 49 per cent.

The number of agreed sales in the UK market also fell by 20 per cent during the month.

On the supply side of the market, new instructions to sell property fell at the fastest pace since last September, providing little evidence of forced selling to date.

Encouragingly, the stock of unsold property on surveyors' books showed signs of stabilising in March, having fallen by 1.3 per cent on the month – remaining 50 per cent up on annual terms.

Price expectations are now at the lowest level since October 1998.

The situation could weaken further in the near future, according to Rics, but may prove beneficial to first-time buyers and other groups presently excluded from the market.

"The next six months will be a crucial period for homeowners but would-be buyers with larger deposits may see this market as an opportunity to acquire property in areas to which they could not previously aspire as recently as the end of 2007," said Mr Leaf.