Even estate agents say boom is over

Even estate agents say boom is over

The monthly report is expected to reveal an uncharacteristic level of gloom among estate agents and surveyors about the housing market. It will show that it has slowed dramatically and prices are falling in parts of the country, particularly the south east of England. Buyers are scarce and demand low.

House prices have been climbing almost relentlessly since 1996. The market faltered briefly last year as the war in Iraq began, but revived again at the beginning of this year.

This helped to prompt a succession of interest rate rises by the Bank of England. RICS economist Milan Khatri said that the new slowdown appeared to be well established. 'People are hesitant to declare the end of the boom, but this time it is very different. It is quite clear that the market has slowed.'

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This coincides with warnings by economists that house prices could be hit by renewed concerns over pensions. The interim report from the Pensions Commission, published last week, warned that pension saving will have to increase dramatically if future generations are to avoid poverty in retirement. The report also warned that people should not rely on house price profits to pay for retirement.

Simon Rubinsohn, an economist with stockbroker Gerrard, said that increased pension saving could reduce the amount people were able to spend on mortgages.

Stewart Robertson, UK economist with forecaster Lombard Street Research, said that mistrust of the stock market and conventional investment plans had led people to see property as a substitute for pensions. But if they were compelled to save in designated pension schemes 'gloom over the housing market is not implausible'.

The RICS survey, due for publication on Tuesday, is based on reports from estate agents and surveyors around the country. Another survey, due out tomorrow from property website Rightmove, is also expected to show there has been no autumn upswing in activity this year.

Estate agents and mortgage lenders are notorious for their optimism, but one agency source said last week: 'The market has stopped dead in its tracks. Estate agents are hanging around thinking where is my next customer?'