The survey, carried out by The Royal Institution of Chartered Surveyors (RICS), has added credibility to homeowners’ fears that the once buoyant UK housing market is heading for a sharp downturn.
The RICS house price balance fell to minus 49.1 in December, its lowest trough since November 1992. The fall marked the fifth consecutive month of easing prices.
RICS spokesman Ian Perry felt these results were a fair reflection of the current financial climate:
‘The housing market is clearly feeling the pinch from the credit crunch and the round of interest rate hikes in 2007. However, while sentiment has fallen sharply, economic conditions are vastly different to those of the early 1990s when interest rates were in double-digits.’
The survey showed the stock of unsold property on surveyors' books jumped by a further 7.1 percent after a 9.1 percent rise in November and a 10.3 percent gain in October.
Despite these worries, some financial experts are convinced that the worst period of the credit crunch is now over.
Writing for Times Online, Anatole Kalatsky suggests that ‘conditions are not nearly as bad as the headlines and market pundits suggest. In Britain, there seems to be almost no chance of economic and financial disasters comparable to those suffered from 1990 to 1992.'
Chris Eagle, Commercial Manager at CreditChoices, talks of a middle ground between these two viewpoints:
‘Economic cycles are shortening, as illustrated by the mini-recession of 2005, therefore the likelihood of Britain entering into a prolonged period of recession is unlikely. However, due to the current financial outlook, where credit is being largely denied to those who need it for daily purchases, and energy prices are going through the roof, the economy is not destined to blossom in 2008. It could be some time before house prices begin to creep up again.’
