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Confidence in Britain's housing market has sunk to its lowest level for more than 30 years, figures to be published this week will reveal, as property prices continue to fall and mortgage lenders restrict home loan finance.
The Royal Institute of Chartered Surveyors (RICS) says that 95 per
cent more surveyors reported a fall in house prices in April than a rise, the worst figure it has reported since it began publishing monthly property market surveys in January 1978.
In some areas of the country, including East Anglia, the North and Northwest of England, not a single surveyor reported house price increases, with 100 per cent reporting declines during April. Even in Scotland, where the housing market has been more robust in recent months, Rics says more surveyors are now reporting house price falls than rises.
"Many would-be buyers are either struggling to raise the necessary finance or are exercising caution in the light of current economic uncertainty," Rics warns. "With the official interest rate cuts not being fully passed on to the high street, lenders continue to pull back on the range of mortgage products and further scale down loan-to-value ratios, there is little expectation that demand will improve in the near term."
Rics also warns that Britain's property market may deteriorate even further, because a shortage of supply of homes coming up for sale is acting as a brake on price falls. If economic problems were to cause an increase in the number of homeowners forced into selling their homes, much more significant price falls would be likely.
Worryingly, there is some evidence that this trend has already begun. Stephen Thornton, a spokesman for Rics, said that there had been a sharp increase in the number of properties coming on to the books of surveyors in London last month. He warned: "When there is a big jump upwards in new instructions it can indicate forced sales - either repossessions or sales from those attempting to avoid the repossession process."
This may reflect the sharp rise in the number of homeowners facing the prospect of losing their homes that was reported by the Ministry of Justice last week.
It said the number of repossession orders made in the English and Welsh courts during the first quarter of the year was 17 per cent higher than in the first three months of 2007.
The Ministry of Justice also said the number of repossession claims from lenders, the first stage in the legal process of confiscating the home of someone who falls behind on their mortgage payments, had risen by 16 per cent in the first quarter. It is at this stage that many borrowers would seek to sell their homes, in order to avoid the repossession process.
- INDEPENDENT
