UK: House prices weakest since 1978

The Royal Institution of Chartered Surveyors said its house price balance fell to -95.1 in the three months to April from -79.4 in March -- the weakest since the series began in January 1978 and well below forecasts for a reading of -80.0. The balance fell in every region compared with March. The figures are likely to add to growing concern over the health of the housing market after Bank of England policymaker David Blanchflower warned last month that prices could slump by almost a third unless aggressive remedial action was taken. The Bank is under pressure to continue cutting interest rates -- after three cuts since December -- to shore up the economy in the wake of the global credit crunch.

But consistently strong inflation figures are making it hard to justify any drastic policy easing. “Although most surveyors are now seeing price declines, the extent of the fall, is at this stage, quite modest,” said RICS spokesman Ian Perry. “The real issue is the collapse in the number of housing transactions. This has very real implications, not just for the property industry but also the high street and the wider economy.”

Northern Ireland witnessed the steepest falls in house prices, according to the RICS survey, with nearly a third of surveyors reporting prices down by more than 8%. Declines of a similar magnitude are being felt to a lesser extent across England and Wales and surveyors in East Anglia, the north and north west are unanimous that prices are falling.

Scotland, previously the only region to score a positive house price balance, also slipped into the red. Expectations for future house prices fell to a series low while interest from prospective buyers decreased at the sharpest pace on record. The completed sales to stock of unsold property ratio -- regarded by some economists as a more reliable gauge of the health of the housing market -- declined further with market conditions at their loosest since the 1996, RICS said. (Reuters)