According to the Royal Institute of Chartered Surveyors (RICS), house prices have fallen for the second month in succession in the UK, excluding London and Scotland.

Around 14.6% of surveyors reported a fall in prices, up from August’s figure of 3.3%, which is the fastest decline since September 2005 when 19.4% reported prices decreasing. The largest price falls were reported in East Anglia, Wales and in the Midlands. Smaller falls were reported in the South East, South West, Yorkshire and Humberside and the North West .

Surveyor confidence in both sales and prices has deteriorated further, reaching their lowest levels since March 2003 and May 2005. This is being driven by interest rate increases and related financial markets issues.

In addition new buyer enquiries have also declined for the tenth consecutive month and at the fastest pace since March 2003. Around 51% of surveyors reported a fall than a rise, which is up from 39% in August. Five interest rate increases since August 2006, and tightening mortgage lending criteria is weighing further on buyer affordability.

Jeremy Leaf, RICS spokesperson, said: “Although house prices continue to fall, the underlying economy remains strong. A major correction in the market seems unlikely while economic growth is above trend and employment conditions remain buoyant.

“The combination of rising interest rates, the introduction of Home Information Packs and volatility in the financial markets resulting in tightening of lending criteria has certainly affected the confidence of buyers and sellers. As a result, some would-be buyers are turning to the rental market whereas others, conscious that the next move in interest rates is now likely to be down rather than up and market meltdown is highly improbable, are seizing the opportunity to negotiate with more flexible vendors in a less competitive market-place.”