House market softening as new buyers 'fade away'

The property market is set for a double-dip recession even if the wider economy escapes such a fate, the latest survey indicates.

The Royal Institution of Chartered Surveyors says that buyers "are beginning to fade away", and the number of estate agents who see house prices increasing is at its lowest level since the start of the recession in April last year.

The number of respondents saying things will get better minus those who see a deterioration, declined from minus 36 to minus 49 over October. The figure is a reliable leading indicator of future trends.

The figures may exaggerate the potential weakness, as many in the market see only modest declines or stagnation rather than dramatic drops.

One of the few bright spots in the survey is the reading on new selling instructions, which are slowing – suggesting that, in the short term, prices may hold up in response to a shortage of stock, as happened last year.