By Peter Graff
Quoted from the Guardian (link to article displayed below)

LONDON, March 11 (Reuters) - British surveyors are recording falling housing prices by the worst margin since the market crashed in 1990, the Royal Institute of Chartered Surveyors said on Tuesday.

During the past three months, only four percent of surveyors reported prices rising, while 57 percent said they were falling, a net balance of minus 53 percent.
When adjusted for seasonal factors, the net balance was minus 64.1 percent, the worst figure for the housing market that the RICS survey has recorded since June 1990 when house prices began a half-decade slump. January's figure was -54.8 percent.
"This is very soft indeed, reflecting the interplay between stretched valuations, tightening lending standards and widening lending spreads," said Michael Saunders at Citigroup.

"The further adverse effects of rising repossessions, weakening job growth and then probably a rise in unemployment still lie ahead."
The house price data were among a raft of mostly bad news on Tuesday suggesting the British economy is slowing sharply on the eve of finance minister Alistair Darling's first budget.

The National Institute of Economic and Social Research reported economic growth in the three months to the end of February was just 0.5 percent, and downwardly revised their figure from the previous month to just 0.4 percent. Britain's quarterly growth rate last year was close to 0.7 percent.

In one piece of more positive news, retail sales grew modestly in February after January's rebound from two-year lows.

But most analysts were focused on the house price data, a closely watched measure in a country where two thirds of houses are privately owned.
"Much weaker than expected, and in the wake of yesterday's indications of mounting cost pressures in the production sector reaffirming the case for lower UK rates from an activity perspective," said Richard McGuire, fixed income strategist at Royal Bank of Canada.

Stocks of unsold property jumped by more than 8.5 percent, the fifth consecutive monthly increase of more than 8 percent. The stock of unsold homes has now risen by 48.6 percent over the past 12 months, the steepest rise in unsold property since 1989.
Surveyors said they each had an average of 92 homes on their books, while recording an average of only 24.4 sales during the three month period on a seasonally adjusted basis.

British house prices have tripled over the last 10 years, but the market has slowed over the past year, with many first time buyers no longer able to afford a house and lenders tightening up requirements for mortgages.

With credit scarce on global markets, mortgage interest rates have not fallen despite a cut of half a percentage point in the Bank of England's lending rate since December.
Some lenders have raised the deposits they require for first-time buyers seeking the cheapest loans.

The Council of Mortgage Lenders said first time buyers were now lent on average 88 percent of their home's value in January, down from 90 percent in December. Home movers, who typically borrow less, borrowed just 70 percent, down from 73 percent.
Although prices have already begun falling month-to-month, Britain has yet to experience a year-on-year fall like the slump that has hit the United States.

Official government figures showed prices in January were 8.0 percent higher than a year earlier, down from an 8.4 percent increase in December. Those figures, based on completed sales, lag other indicators but show that inflation has slowed.
Finance minister Alistair Darling said last week that Britain's housing market was slowing but remains "fundamentally strong".


http://www.guardian.co.uk/feedarticle?id=7374775