House price balance records surprise fall

09/03/2010 13:36:33

House prices grew last month at their slowest pace since August after the amount of new property coming on to the market grew faster than the number of new buyers, a survey indicated on Tuesday.

The Royal Institution of Chartered Surveyors said its monthly house price balance dropped to +17 in February from a downwardly revised +31 in January, a much bigger fall in the seasonally adjusted index than any of the 11 economists polled by Reuters last week had expected.

"Most market indicators are still positive and consistent with further house price increases," said RICS spokesman Jeremy Leaf. "However, the magnitude of the gains going forward is likely to continue to ease reflecting the fact that new supply coming onto the market is starting to outstrip fresh demand."

February's decline is the sharpest one-month fall in the balance since April 2008, and masks a big regional variation in house price trends.

Prices fell in Wales, northern England, Yorkshire and Humberside and the West Midlands, but continued to rise sharply in London, southern and eastern England and in Scotland.

RICS's overall message of house price rises contrasts with data from mortgage lenders Halifax and Nationwide, which both reported unexpected falls in house prices last month.

The surveyors who take part in RICS's survey continue to expect house prices to rise over the next three months, albeit at a slower pace than before, with the price expectations balance falling to +7 from +21.

House prices have risen around 10 percent from a five-year low set in the first half of 2009.