Demand levels boosted by lack of supply

House price growth in September was negative for the second consecutive month, the Royal Institution of Chartered Surveyors (Rics) has reported.

According to Rics, 14.6 per cent more chartered surveyors saw prices fall rather than rise last month, following 3.3 per cent reporting so in August.

This marked the largest decline since September 2005, with confidence in prices and sales levels also falling.

However, Rics has revealed that the ratio of completed sales actually rose in September as supply fell further.

"Although house prices continue to fall, the underlying economy remains strong. A major correction in the market seems unlikely while economic growth is above trend and employment conditions remain buoyant," advised Rics spokesperson Jeremy Leaf.

"Some would-be buyers are turning to the rental market whereas others, conscious that the next move in interest rates is now likely to be down rather than up and market meltdown is highly improbable, are seizing the opportunity to negotiate with more flexible vendors in a less competitive market-place," Mr Leaf added.

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Halifax recently reported that prices fell by 0.6 per cent in September.


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