House prices fall as fears over the economy keep buyers away

A balance of 7 per cent of surveyors reported a decline in new buyer enquiries last month, the Royal Institution of Chartered Surveyors (RICS) said.

RICS said potential purchasers were cautious about “the outlook for the economy”.

The RICS survey also revealed a balance of 31 per cent of surveyors reported a fall in housing prices in the month, however this has now improved for three months in succession and stands at its best level since July.

The survey follows two conflicting reports from mortgage providers Nationwide and Halifax, with the former reporting a drop in January house prices and the latter suggesting a rise. RICS spokesman Ian Perry said: “The key indicators of market activity remained in negative territory in January, albeit a little less so than in December.

“Uncertainty over the prospects for employment, alongside the shortage of mortgage finance particularly for first-time buyers, continues to weigh heavily on transaction levels.”

RICS also said there was a clear regional pattern emerging with London seeing a greater level of price resilience than the north of England and Midlands, where the market remains under greater pressure.

A balance of 59 per cent of surveyors reported price falls in the East Midlands, compared to just 4 per cent in London.

New instructions, which indicate supply levels to the market, were also moderately negative, with 3 per cent more surveyors reporting instructions fell rather than rose – although this is an improvement from 14 per cent in December.

But on a brighter note, surveyors remain cautiously optimistic about future prospects.