House price falls add to economic gloom

As the Times​ newspaper reported the results of a poll which showed a 50 per cent fall in the number of people eating out compared with last year, a new survey fuelled consumer fears of economic meltdown.

With consumer confidence set to take another thumping from tomorrow's Budget - the first from Chancellor of the Exchequer Alistair Darling - figures released today by the Royal Institute of Chartered Surveyors (RICS) suggest the housing market is at its weakest since 1996.

The orgnisation said house price declines had accelerated in February, with the net balance of surveyors reporting falling rather than rising prices climbing to 64.1 per cent, versus 54.8 per cent in January.

The sales to stock ratio was the lowest it had been since September 1996, as the market blocked up with unsold properties.

The RICS said in addition to deteriorating sentiment, the pace of the decline in new buyer enquiries picked up last month for the second consecutive month.

RICS spokesman Ian Perry commented: "Confidence in the market is clearly having an effect on prices.

"A combination of a lack of available finance and weakening demand is causing a slow drop in capital values.

"While there is very little new supply coming onto the market, it is unlikely that there will be significant price drops in the short term, but the build up of unsold stocks will encourage buyers to negotiate lower asking prices."

The RICS data will do little to stem sentiment in many quarters that things are likely to get worse across the UK economy.

However it was not all gloom and doom, the institute added.

Scotland, the West Midlands, the North and Yorkshire had all seen double digit percentage house price increases during the last five months.

Also, sales expectations had turned positive last month for the first time since June 2007, while price expectations had also improved.