House price falls have increased even further but tight supply is limiting the extent of the decline, reports Chartered Surveyors in the South West in the RICS UK housing market survey published today.

For the eight consecutive month chartered surveyors in the region are reporting a price fall - up significantly to 77 per cent from 63 per cent in March).

However, this is not as high as in other parts of the UK, showing the region is faring a little better and the price falls still remain relatively small at this stage compared to past downturns. A further 19 per cent of surveyors stated that prices have remained the same and just three per cent reported a rise.

Demand remains low in the area but the lack of new properties for sale is providing a crutch to the market. It is clear that price falls are being driven by the inability of many to secure finance rather than a rapid influx of supply into the market.

However, in contrast to most other areas, the South West has continued to see an increase in new instructions to sell - up six per cent on last month, Large numbers of distress sales (either repossessions or sales from those attempting to avoid the repossession process) have not yet appeared in the market place and, while mortgage arrears remain low and the employment situation remains strong, the lack of supply will continue to prevent large declines.

Tina Taylor, RICS South West spokesperson and head of residential development at Knight Frank said: "The local market has luckily not been as badly damaged by the credit crunch as in other areas.

"However, the banks' tightening of credit has had a major impact on sales of new homes as mortgage availability becomes more difficult and impacts on market confidence.

"There is also evidence that developers are seeking alternative sources of funding away from the traditional funding such as venture capital trusts."

11:00am Tuesday 13th May 2008

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