Sterling falls as house price gloom deepens

Daily Telegraph--Sterling fell against the dollar and the euro after a report showed that the housing market is in its worst state for 30 years as a record number of estate agents reported falling property prices.

The Royal Institution of Chartered Surveyors (RICS) said 82 per cent of estate agents in the UK had seen a drop in prices since the start of the year, with just one per cent reporting a rise.

The ratio is the worst since records began in 1978, and means that the housing slump is even more widespread than during the crash of the early 1990s.

The survey also showed the number of completed property sales "falling off a cliff" in April, in the words of one expert, because fewer properties are coming on the market and potential buyers are struggling to get mortgages.

The news drove sterling down below $1.95 and also saw it weaken against the euro.

Analysts have predicted dire consequences for the wider economy, with around 4,000 estate agents already made redundant and sales of white goods, furniture and other household items likely to drop sharply with fewer people moving home.

Simon Rubinsohn, chief economist for the RICS, said: "We have gone back through our records and the proportion of surveyors reporting a fall in property prices is the worst since we started doing a monthly survey in 1978.

"House prices are falling right across the country. Even during the house price crash of the early 1990s some parts of the country didn't take as much of a beating.

"At the same time, the number of completed sales is falling off a cliff, because people don't want to put their houses on the market while prices are falling, and people who want to buy property are struggling to get a mortgage."