House price boom has ended, reveal surveyors

The boom in house prices has finally come to an end with prices in parts of the country falling for the first time for two years, according to a report published today.

The boom in house prices has finally come to an end with prices in parts of the country falling for the first time for two years, according to a report published today.

A survey of chartered surveyors found that the number reporting a rise in house prices hit its lowest level since 1998.

The net balance between surveyors in June reporting a rise in house prices over those who saw a fall was only 5 per cent - 25 per cent down on the previous month.

The Royal Institution of Chartered Surveyors (RICS), which produced the report, said: "This shows a continued slowing of house price inflation and signals the end of the mini-boom in prices."

In London, prices actually fell for the first time since 1998, with a net balance of 14 per cent reporting a decline. Surveyors in south-east and south-west England and East Anglia - three areas that shared in the boom - also reported a downturn, as did the East Midlands and the North-west.

But surveyors in areas that missed out on the surge in prices reported rises last month. They included the North of England, Yorkshire, Humberside and the West Midlands

The number of transactions fell across the UK with the average number of sales per surveyor at 30 - down 12 per cent from the previous survey and the lowest level since December 1999. Further evidence of cooling demand came from a drop in the number of inquiries from potential homebuyers. The shortage of buyers led topessimism among surveyors.

A balance of 19 per cent now expect prices to fall over the coming months compared with a balance of 13 per cent forecasting a rise in May and 61 per cent a year ago. "Many believe prices will have to fall in the short term to attract buyers again," the RICS said.

But the RICS said it did not believe there was any risk of a property crash. Good economic and employment prospects ensured that further price rises were likely albeit at a much more moderate pace than in previous months, it said. A spokesman for the RICS said: "With a plentiful supply of properties on most estate agents' books and the real prospect of house price reductions, the next few months will be a good time to consider buying.

"Stability in the market and realistic pricing should also help the first-time buyers who have been put off by recent market conditions."

The message in the report was borne out by anecdotal evidence from surveyors' firms.

"Over the past few months the market situation has reversed completely," said Keith Barnfield, of Barnfields in Enfield, north London. In Brighton, Geoffrey Holden, of Parsons Sons & Basley, added: "The peak of the boom has passed and the market has changed." But Jonathan Bryson, of Poole Townsend in Barrow-in-Furness, Cumbria, said market confidence was "very good", adding: "Prices are increasing and activity in the £45,000 to £80,000 range is strong."

The RICS report is the fourth monthly fall in a row and will be taken seriously by the Monetary Policy Committee of the Bank of England, which sets interest rates.