But the lettings market is stronger, according to the latest house market survey from the Royal Institution of Chartered Surveyors and Confidencial Imobiliário.
It shows that the national price balance remained broadly unchanged, moving from -63 to -64, indicating 64% more respondents experienced price falls rather than rises.
House price declines continue to be driven by falling demand. Rising supply is not presently an issue, with new vendor instructions falling consistently since December 2010.
Meanwhile, the national confidence index, which is a composite index based on price and sales expectations, deteriorated further into negative territory from -44 to -53, a nine point drop.
The lettings market, however, continues to benefit from the fallout in the sales market, as households who cannot access mortgage finance are opting to rent instead. Indeed, the survey shows that tenant demand and lettings expectations continue to rise.
However, rents are falling and rental expectations are negative. This could reflect an excess of rental stock in the market but there is also anecdotal evidence of a mismatch between the type of stock offered to let and that in demand.
The regional data tends to be more volatile than the national data, but in February, respondents reported roughly similar price falls across all the regions covered by the survey.
‘Although sales volumes continue to fall, activity in the lettings market is rising as households who cannot access mortgage finance are opting to rent instead,’ said RICS senior economist, Josh Miller.
‘However, with unemployment high and rising, it now stands at 14.8% compared to 12.4% a year ago, it remains to be seen how much
further this shift in tenure preference can run. There comes a point, given rising credit constraints and joblessness, where effective housing demand hits an upper limit,’ he added.
CI Spokesman, Ricardo Guimaraes said that survey respondents are increasingly highlighting the unemployment situation, not only because it is rising, but also because of its high level. ‘This is beginning to have an impact on both the sales and lettings sectors, with demand falling in both cases. Rising joblessness precludes getting a mortgage on the one hand, and limits what a household can afford pay in rent on the other hand,’ he explained.
