Home buyer interest grows but lack of mortgages causing 'blockage'

10 March 2009 / by Rachel Mason
Estate agents are seeing more potential buyers coming through their doors, but the continuing lack of mortgage finance is stopping the housing market from recovering.

According to the latest housing market survey from the Royal Institute of Chartered Surveyors (RICS), buyer enthusiasm continued to grow in February, reaching levels not seen for more than two years.

But, says RICS, with so many potential buyers struggling to get mortgage finance, this increased interest is struggling to turn into sales.

"Potential buyers continue to come through estate agency doors but without mortgage finance transaction levels are likely to remain close to all time lows," said RICS spokesperson Jeremy Leaf.

"Worryingly, the lengthy process of obtaining mortgage finance, even for those with large deposits, is contributing towards the blockage in the market place.

"Family homes remain in demand but flats are proving harder to sell in many areas as first-time buyers are struggling to gain a foothold on the property ladder."

RICS found that 20 per cent more chartered surveyors reported a rise than a fall in new buyer enquires – up from 15 per cent in January, but that the demand has not yet translated into sales.

According to the survey, the average number of transactions per agency over the last three months is 9.5, a drop from 9.8 in November, and the lowest figure since the survey began in 1978.

Mr Leaf says the Government needs to do more to help first time buyers or the housing market will continue to struggle.

"The Government must provide guarantees for the new issuance of residential mortgage backed securities to help first time buyers in particular and give the market much needed impetus," he said.

"Without further intervention the housing market will continue to stagnate and the opportunity to take advantage of this renewed interest could be lost which will inevitably have serious implications for the wider economy."

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