House price falls the worst on record

House price falls hit their worst level for at least 30 years in March as economic uncertainty and lack of mortgage finance deterred buyers, Royal Institution of Chartered Surveyors figures show today.

The Rics house-price balance worsened for the eighth straight month with 78.5 per cent more surveyors reporting a fall rather than a rise in house prices. The figure beats the all time-low in June 1990, and is now the lowest figure since the survey began in 1978.

Demand weakened as new buyers' inquiries fell. Expec-tations for sales and prices dropped, with the balance of surveyors expecting prices to rise slumping to an all-time low of -73 per cent.

The Rics figures add to recent gloomy news on the housing market, which helped to drive consumer confidence and spending during the economic boom of recent years. Last week, Halifax reported a 2.5 per cent fall in prices for March, the biggest fall since September 1992.

Lenders have been increasing prices on fixed-rate mortgages, despite falling interest rates and calls from the Chancellor to pass on the cuts to customers.

Where they once rushed to make loans, banks and building societies are reining in lending because of funding and capital constraints. The three-month sterling inter-bank lending rate rose for the second day running yesterday, indicating increasing strain for lenders.

"With the official interest rate cuts not being passed on to the high street, there is little expectation that demand will improve in the near term," Rics said.

Copyright c 2008 Independent Newspapers UK Limited. All rights owned or operated by The Independent.
Provided by ProQuest Information and Learning Company. All rights Reserved.