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RICS records first house price fall in a year

The decline follows a run of three interest rate rises in just four months over the spring and summer.

RICS says prospective buyers have taken heed of rising borrowing costs and warnings from the Bank of England, though there are few signs that a significant market downturn is around the corner.

With fewer people registering with estate agents, buyer enquiries fell for the fourth month in succession. In August 12% more chartered surveyor estate agents noticed a decline in prices than a rise, as opposed to 3% more reporting a rise in July. Sales activity fell by 11% in the quarter to August, down 4% compared to a year ago.

Surveyors have noticed a rise in the stock of unsold property since May, but this is still 12% below last year&#39s levels. This shows that selling activity has seen little notable pick-up despite speculation over price falls.

Despite the dip in the market, a dramatic reduction in house prices is unlikely due to the stable economic climate and firm employment situation. At present, it appears that job security remains good, which is helping to maintain consumer confidence even as interest rates have risen.

London, the South-East and the eastern regions have reported the biggest falls, while prices continue to rise firmly in Scotland and the North-East. Chartered surveyors are expecting sales to steady after the relaxed summer market, though some downward pressure on prices is expected to remain in the months ahead.

Ian Perry, national housing spokesman at RICS, says: “The summer is always a quieter period as people are away and tend to take a break from house hunting. Warnings from the Bank of England have reduced confidence, but houses that reflect their asking price are still attracting plenty of attention.

“Some speculation in the housing market is quite gloomy at the moment. However, we are confident that a prolonged slide in prices will be avoided, underpinned by the strength of the economy and good employment prospects.”

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