RICS house price index under pressure

The prominent Royal Institute of Chartered Surveyors (RICS) house price index fell to -36 in the three months to September from -32 in the three months to August. This fall in the index reflects the fall in house prices in England and Wales and is the largest one-month fall since May 2009. While the drop is effectively blamed upon sellers rushing to the market to sell before further perceived weakness in the UK economy there is also no doubt that buyers are becoming more and more concerned with many retreating to the sidelines.

Despite hopes that the UK property sector would remain fairly steady during this difficult economic period it seems that homeowners in the UK are beginning to run scared. Only last week we saw confirmation that the average house price in the UK fell by £6,000 in September with further falls expected in the short to medium term. If nothing more than a pure supply and demand issue, with more property coming to the market and fewer buyers looking to acquire property, the RICS index is likely to fall further and UK property prices will follow suit. Are we on the verge of a self fulfilling prophecy?