British house prices fell at their fastest pace in the three months to January in at least a decade, a survey signalled today, a sign the interest rate cut last year has done little to stabilise the market.
The Royal Institute of Chartered Surveyors' monthly house prices balance dropped for the sixth straight month, to -54.7 last month from -49.1 in December. Analysts had forecast a less severe deterioration to -51.0.
"The very weak January RICS survey will heighten concern that the housing market is headed for a sharp correction in the face of stretched affordability and tighter lending practices resulting from the credit crunch," said Howard Archer at Global Insight.
RICS attributed the decline to weakening demand rather than increased supply as new buyer enquiries in England and Wales continued to fall, and at a faster pace. The stock of unsold property on surveyors' books also jumped.
"A lack of demand and confidence in the housing market is clearly behind the recent price slowdown. Tightening mortgage lending criteria is a block to many who are keen to take the housing market plunge," said RICS spokesman Jeremy Leaf.
"Agents are finding it difficult to market properties to an audience which has decided to watch the current economic theatre from the wings."
The Bank of England cut interest rates in December and then last week to 5.25 per cent to shore up the economy but many experts say Britain's housing market is still set for a marked slowdown this year after several years of stellar growth.
Mr Leaf said that conditions might stabilise if mortgage lenders started passing on rate cuts to their consumers and unemployment did not start rising.
"The market need only fear a significant fall in prices if job losses start to multiply," he said.