House prices still dropping

House Prices

The fall in house prices is continuing.

The cost of buying a house is falling.

House prices fell over the last quarter due to a scarcity of buyers, according to research carried out by the Royal Institute of Chartered Surveyors (Rics).

The poll, which questioned almost 300 estate agents, found that over half of the participants had recorded a drop in prices in their local area – just 4% saw a rise.

Rics said: “New buyer enquiries dropped for the fifth consecutive month as the housing market slowed further during October. Respondents to the survey report that the market is generally cautious, with many buyers signalling that they are going to wait until the spring to make a decision”.

Stephen Gadsby, of estate agency Gadsby Orridge, said the lack of mortgage funding, especially to first time buyers, is the main obstacle in the market. Banks are reluctant to lend capital to borrowers who have small deposits, which has led to a reduction in sales.

However, a Moneyfacts survey found that the number of mortgage deals available to people with deposits of between 0% and 40% did rise slightly. Just over half of the current deals require a 25% down payment – last year, 66% of mortgage packages required at least a 25% deposit, signalling that the market may be improving.

However, Michelle Slade at Moneyfacts said: “The mortgage market has reached a plateau with no real movement in the number of deal for borrowers with a small deposit”.

She continued:“Lenders continue to target borrowers with at least a 20% deposit and continue to launch their most competitive deals to these borrowers”.