British house prices in the three months to August fell at their sharpest pace in more than a year, a new survey shows, in yet another sign that the property boom may have ended.
The Royal Institution of Chartered Surveyors' seasonally adjusted house prices balance fell to -12 in August from +3 in July. That was the lowest since May 2003 and the first negative reading since June 2003 when prices were depressed in the aftermath of the war in Iraq.
'Warnings from the Bank of England have reduced confidence,' a spokesman for RICS said.
The survey is just the latest in a slew of indicators suggesting that Britain's once-booming housing market has finally come off the boil after five interest rate rises and tough talk from the central bank to slow it down.
Bank of England Monetary Policy Committee member Stephen Nickell said last week that there was reason to believe that the housing market had now turned and even warned that there was a good chance of prices falling at some stage.
Since then, industry figures showed mortgage lending in August rose at its weakest monthly pace in more than two years while one property website showed prices remaining unchanged over the last month.
While most analysts are still expecting the BoE to hike rates by another quarter-point by the end of the year, a growing number is wondering whether signs of slowdown in the housing market mean that rates will peak at their current 4.75%.
RICS said it expected further downward pressure on house prices in the coming months but added that 'a dramatic reduction' was unlikely because of the stable economic climate and tight labour market.
'Some speculation in the housing market is quite gloomy at the moment. However, we are confident that a prolonged slide in prices will be avoided,' the RICS said.
The survey also showed that buyer enquiries fell for the fourth month running while there has been a rise in the stock of unsold property.
