House prices are falling and more drops are expected in the coming months, surveyors said today.
A balance of 24% more surveyors reported falling rather than rising prices last month, the most negative reading since June 2011, the Royal Institution of Chartered Surveyors (RICS) said.
London, which has had strong interest from overseas buyers, is the only region where more surveyors reported price rises than falls.
The West and East Midlands and Yorkshire and Humberside were the areas where surveyors were the most likely to report prices falling.
– Peter Bolton King, RICS global residential director
If vendors want to sell their homes quickly, they will have to be realistic in their price expectations.
The North and North West regions however are seeing demand from buyers generally rising over the last four months in a row, while demand has either been unchanged or dropped off elsewhere.
Sales are expected to pick up slightly in the next few months, but both prices and sales figures are likely to show a deterioration in the next year, the study found.
Lenders have been tightening their borrowing criteria in recent months amid the weak economy and Bank of England figures recently showed that mortgage approvals dropped to an 18-month low in June.
Competition has recently increased among lenders who have cut rates to attract buyers with larger amounts of equity, but borrowers with smaller deposits are expected to have a particularly tough time finding a deal in the coming months.
The start of the school holidays meant activity in the market tailed off further, with the number of new sellers coming to market declining for the third month in a row, while demand from buyers remained broadly flat despite the wet weather, the study said.
RICS said that the the difficulties many buyers are having in getting a mortgage has contributed to the drop in transactions.