Property prices falling - but not locally

The property industry is preparing for more difficult times ahead, says the Royal Institution of Chartered Surveyors.

RICS is predicting a 5% fall in prices this year and next. An already difficult year has been compounded by the news that a sharp adjustment to counter this is forcing yields upwards. RICS has reduced its forecast for total returns from 8% to 3%. Yields, which show a building's rental income as a proportion of its price, have dropped substantially in recent years as more investors have moved into the sector.

Many property shares have dropped by 30% this year, reflecting fears of falling values of offices, shops and industrial buildings. This is a national portrait, though, and does not reflect what is happening here in Bradford. Prices continue to rise in Bradford, which was recently cited in a national survey for its availability and cost of land and property.

RICS added that transactional prices and the number of deals are both falling.

Surveys on the housing market have revealed conflicting signals. The Halifax says that house price growth has slowed from 2.3% in the second quarter of this year to 0.9% in the third quarter. The annual growth rate stands at 10.7%. Nationwide’s survey says prices rose by 0.7% in September. However, most observers agree that the position is one of a gradual slowdown in the market. The figures for September, said one economist, show the “beginning of the end for the boom in the UK housing market.”