Housing market hit as confidence is knocked

New instructions, which reflect supply levels, dropped in September as more surveyors reported falls rather than rises in available properties, said the Royal Institution of Chartered Surveyors (RICS).

The monthly RICS housing market survey revealed a continuing decline in house prices with more surveyors recording lower rather than higher prices over the last three months.

RICS said September’s survey revealed a widening regional gap as London remains the only region with rising prices while the rest of the UK, such as Yorkshire & Humberside, the East and West Midlands and East Anglia recorded falling prices.

The decline in new instructions comes despite mortgage providers slashing rates to try to attract new customers and the Bank of England’s record low base rate of 0.5 per cent.

Average mortgage repayments were £574.15, about 26 per cent of earnings after tax, according to research by the Halifax, compared with 48 per cent of take home pay at £887.62 in mid-2007.

An RICS spokesman said: “Falling supply of fresh stock is indicative of general fears overhanging the economy, with many potential sellers preferring to stay put for now.”

RICS also said the Bank of England decision to inject £75bn of cash into the economy through quantitative easing would help keep mortgage rates down and reduce the chances of more repossessions.