Housing market activity is down 30% compared to this time last year according to the Royal Institution of Chartered Surveyors (RICS) monthly housing survey published today (Tuesday, 17 May).

Market indicators such as buyer enquiries and newly agreed sales remain flat for a second month. Potential buyers remain hesitant as new enquiries showed no significant change for four consecutive months.

April also saw house prices fall at a similar pace to last month with 40% of chartered surveyors reporting a fall in house prices, down from 37% last month.

Demand conditions are subdued, though the number of sellers is on the up across most of the country. Selling instructions increased at the strongest pace in over two years, leading to an expanding stock of unsold property on surveyors’ books, rising 5% over the past three months.

This has reaffirmed buyers’ bargaining power. Surveyors have commented that some sellers have still not adjusted to the changed market conditions over the past six to nine months and continue to set unrealistic prices.

Prices deteriorated markedly in London, after four months of stability. Most regions reported fewer price falls with the West Midlands remaining subdued though the effects of Rover’s collapse are not yet evident. Only Scotland saw price rises, though the pace of increase has slowed to a trickle.

RICS national housing market spokesperson, Ian Perry comments: "While sales have stabilised in recent months they remain significantly down on last year’s. Concerns that interest rates may rise again after the election seem to have kept would-be buyers out of the market."

"However, the low number of property sales, together with a marked cooling in high street spending suggests that the Bank of England has achieved its desire to reign back household spending and borrowing, mitigating the need to raise interest rates again in the months ahead. A growing realisation that interest rates will not continue to rise could provide the catalyst for a gradual rise in sales in the second half of 2005."