House prices in Britain fell in the three months to August at their sharpest pace in more than a year, a survey has shown.
The Royal Institution of Chartered Surveyors' (RICS) seasonally adjusted house prices balance fell to -12 in August from +3 in July. That was the lowest since May 2003 and the first negative reading since June 2003 when prices were depressed in the aftermath of the war in Iraq.
The survey, released on Tuesday, is just the latest in a slew of indicators suggesting that the once-booming housing market has finally come off the boil after five interest rate rises and tough talk from the central bank to slow it down.
BoE Monetary Policy Committee member Mr Stephen Nickell said last week that there was reason to believe that the housing market had now turned and even warned that there was a good chance of prices falling at some stage.
Since then, industry figures showed mortgage lending in August rose at its weakest monthly pace in more than two years while one property website showed prices remaining unchanged over the last month.
Although most analysts are still expecting the BoE to increase rates by another quarter-point by the end of the year, a growing number is wondering whether signs of slowdown in the housing market mean that rates will peak at their current 4.75 per cent.
RICS said it expected further downward pressure on house prices in the coming months but added that "a dramatic reduction" was unlikely because of the stable economic climate and tight labour market.
The survey also showed that buyer enquiries fell for the fourth month running while there has been a rise in the stock of unsold property.