House sales at lowest level for 30 years

13 January 2009 / by Rachael Stiles
Monthly house sales have fallen to their lowest level for 30 years, according to the Royal Institute of Chartered Surveyors (RICS), despite buyer interest remaining strong and interest rates coming down.

The RICS UK housing market survey, published today, has revealed record low sales – the lowest since the survey began in 1978 – with an average 10.1 transactions per estate agency during the last three months, compared to 10.6 in November last year.

The predictably quiet Christmas period saw sales drop even further, but buyer interest has remained buoyant, the survey found, with 17 per cent more Chartered Surveyors reporting a rise than a fall in enquiries from new buyers, compared to 16 per cent in November.

As interest rates and house prices fall, there is currently a lot of opportunity to get into the market for those who already have a significant deposit saved up. But high loan to value mortgages are still expensive as mortgage lenders scale back their lending and stick to low-risk customers in an attempt to improve their balance sheets, freezing many first time buyers out of the market.

And, despite the increase in the number of people who are opting to stay in their homes instead of moving until the market stabilises, or because they cannot sell their property, RICS found that three per cent more Chartered Surveyors reported a rise than a fall in instructions to sell property, up from zero percent in November.

"Buyer interest is now at levels not seen since 2006 but without mortgage finance the housing market is at a standstill and transaction levels at an all time low." said RICS spokesperson Ian Perry, commenting on the survey's findings.

"First-time buyers and owner-occupiers are now stuck in a market which does not fulfil their aspirations. The Government must act now to ensure that order is restored to the current chaos.

"A first step would be for the Government to provide guarantees for the new issuance of residential mortgage backed securities.

"Without this help there is a real danger that homebuyers will be frozen out of the market, transaction levels and prices will fall to new lows, repossessions will increase and negative equity will become common place. Together this has the potential to push the country deeper into recession."

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