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Rise in House Prices May Have Run Out of Steam

Rise in House Prices May Have Run Out of Steam

The upward movement of house prices may have run out of steam. Chartered surveyors when polled have more of them expecting prices to fall next month than those who thought so in the last survey. The major reason is the influx of homes being put into the housing market.

More and more homes are being put up for sale. The supply is increasing much faster than borrowers are obtaining lending. When the supply hits a certain point the prices will fall, putting at risk the ability of sellers to profit from a sale and will cause equity values to drop for homeowners.

Royal Institution of Chartered Surveyors spokesman Jeremy Leaf said: "With supply of property now beginning to outstrip demand there is a risk of some modest slippage in prices during the second half of the year."

Surveyors reported an increase in house prices in many areas but the large supply of homes is pushing net balances into negative. This occurred everywhere except for London and Scotland.

One reason demand has fallen is that lender’s tightening on first time borrower qualifications have shut many out of the market. Deposits have been reported to be near 30 per cent to qualify. In addition new FSA regulations to halt fast-track and self certified mortgages will further limit the pool of potential buyers to a now smaller group than before.

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