For the first time since October 2005, house price growth turned negative with 1.8% more chartered surveyors reporting a fall rather than a rise in house prices which is down from 10.8% reporting a rise in July, according to the Royal Institute of Chartered Surveyors (RICS). Demand continues to weaken as rising interest rates weighed on buyer affordability. The trend was most prevalent in the West Midlands, the North West and East Anglia. However, London is yet to be affected by credit market turmoil and remains the region with the strongest price growth in England.

New buyer enquiries declined for the ninth consecutive month and at the fastest pace since August 2004 with potential buyers remaining cautious as the effect of interest rate rises filters through. Around 37% more chartered surveyors reported a fall rather than a rise in new buyer enquiries compared with 27% in July.

Ian Perry, RICS spokesman, said: “Potential house buyers have become far more cautious as they wait and see what affect interest rate rises will have on household finances. Affordability is at its most stretched in over a decade and many will worry that rising mortgage repayments will prove a step to far.
“The market will soften further, going into the autumn, reducing some impetus from those that have been chasing a rapidly moving market. Home Information Packs (HIPs) have reduced the number of four bedroom family properties coming onto the market, making family homes even more difficult to purchase.”