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The Royal Institution of Chartered Surveyors (Rics) has announced that house price growth turned negative in August, the first such fall since October 2005.

According to its latest housing market survey more chartered surveyors saw house prices fall last month rather than rise as demand faltered across the country. Only London escaped the downturn.

Last month's figures contrast sharply with July's - when 10.8 per cent of surveyors reporting rises as opposed to falls - suggesting a turnaround in the housing market is now in full swing.

The impact of five interest rate hikes in 12 months had long been expected to take its toll of the overheating housing market and analysts say the current downturn also reflects tightening in the credit market.

Rics spokesman Ian Perry said: "Affordability is at its most stretched in over a decade and many will worry that rising mortgage repayments will prove a step too far."

He added that "the market will soften further going into the autumn".

Also mentioned in the report was the fact that instructions for four-bedroom properties fell last month by 51 per cent on the previous year's levels, possibly as a consequence of the looming Hips deadline.

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Author:  Joanne McCabe

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