The RICS house price balance declined at the fastest pace since July 2005 but limited supply is still propping up the market, says RICS’ UK Housing Market Survey.

Surveyors reported that house price growth remained negative for the third month in succession.

22.2% more Chartered Surveyors reported a fall than a rise in house prices, down from 14.9  in September -  the fastest decline in sentiment since July 2005 when 30.9%Chartered Surveyors reported a fall than a rise.

However, new instructions declined for the fifth consecutive month. 17% more Chartered Surveyors reported a fall than a rise in new instructions to sell property. 

Those on the property ladder remain under little pressure to sell while the economy remains fundamentally sound. The supply side of the market remains tight and continues to provide some support.

Interest rate rises, the recent credit crunch and the subsequent tightening of lending conditions have all had an impact upon demand.

New buyer enquiries declined for the 11th successive month with 41% more Chartered Surveyors reporting a fall than a rise.

Weak demand has pushed the stock of unsold property up at the highest pace since May 2003.

The stock of unsold property per surveyor rose to 64.9 compared to 59.7 in September.

Consequently, market conditions are the loosest they have been since May 2006.

The ratio of completed sales compared to the stock of unsold property on the market fell to 35.7 % from 38.3% in September.

Surveyor confidence in house prices reached the lowest level since April 2003.

Recent market conditions are still having a depressing effect on market sentiment.

Surveyors in East Anglia reported the largest price falls followed by the West Midlands, the South West and East Midlands and Wales.

London was the only area where surveyors did not report a fall.

RICS spokesman Ian Perry said:

"The housing market is seeing the awaited slowdown that many had been expecting, with modest falls reported across most UK regions.

"A decline in transactions may be in the offing as stalemate returns to the market, although a material fall in prices would require a weaker labour market prompting forced sales.

"Credit market turmoil has yet to put downward pressure on prices in the capital although prices have now stabilised even here.

"Significantly, London is the only region where new instructions have risen over the last two months indicating that more leveraged buyers at the margins may already be feeling the credit squeeze."

For the full press release and PDF of the housing market survey please see the Downloads panel.

The RICS Housing Market Survey index can be accessed at www.rics.org/hms.