The RICS (Royal Institute of Chartered Surveyor’s) Housing Market Survey found that 32 percent more surveyors reported house price falls as opposed to increases in August and reported that property values fell for the second consecutive month, in line with other findings.
The main reasoning for falling prices and the negative outlook is that more property is now coming onto the market, less interest from buyers in the uncertain financial climate and the continued restriction in mortgage availability, especially for first time buyers or those with equity less than 20-30%.
In combination this looks like a negative downward spiral and only time will tell if one factor breaks the chain. Although some expect sales volume to increase with lower prices we could end up with a restriction of new property on the market as sellers are less motivated by lower pricing. Although the end of HIPS increased of property for sale, only time will tell how serious the new vendors are to move.
Scotland bucked the trend, reporting price increases but Northern Ireland reported falling prices for the third year running.
Bad news for homeowners who would like to move, however good news for long term landlords as rental demand should increase along with rental pricing. Smart accidental landlords may have offloaded their property when prices boomed during the end of 2009 and beginning of 2010 minimizing their capital loss. In fact many accidental landlords let at monthly losses once all other costs were included such as landlord insurance and landlord legal expenses.
If you rent your property, ensure you have comprehensive landlord building insurance to protect your investment.