Page last updated at 10:08 GMT, Tuesday, 13 January 2009

House sales 'continuing to fall'

Redundant "For Sale" signs
More needs to be done to end the mortgage drought, Rics says

Property sales fell even further in December, according to the latest survey from the Royal Institution of Chartered Surveyors (Rics).

The average number of sales per estate agency fell during the three months to December to 10.1, down from the 10.6 sales level reported a month ago.

Rics said this was the lowest level since its survey started in 1978.

Separately, the government's own house price survey said prices in the UK had fallen by 8.6% in the year to November.

It showed that the fall in prices accelerated during the autumn, taking the price of the average UK home down to 199,732.

The survey is published by the Department for Communities and Local Government (DCLG), and is based on a sample of 50,000 completed house purchases each month.

Falling prices

The Rics survey reported that inquiries from new buyers rose for the second month in a row, driven by lower interest rates and cheaper homes.

First-time buyers and owner-occupiers are now stuck in a market which does not fulfil their aspirations
Ian Perry, Rics

However, the group warned that the lack of mortgage availability meant the number of sales would stay depressed.

Mortgage lenders are continuing to demand larger deposits as they ration home loans to their customers.

At the same time, some would-be buyers are reluctant to step into the market, when house prices have fallen by about 15% in the past year, with some observers forecasting similar drops in 2009.

Separately on Tuesday, housebuilder Taylor Wimpey said the number of homes it constructed last year was a third lower than in 2007, and that it would continue to find ways to reduce costs in light of the downturn.

And a survey by the British Chambers of Commerce painted a gloomy picture of the UK economy, saying there had been a "frightening deterioration" towards the end of 2008.

Guarantee call

Rics spokesperson Ian Perry said: "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."

"First-time buyers and owner-occupiers are now stuck in a market which does not fulfil their aspirations."

The group has repeated calls for the government to help end the mortgage drought by adopting recommendations made by Sir James Crosby that it should provide a guarantee for billions of pounds of lending.

Some of Britain's top bankers met at the prime minister's country residence, Chequers, at the weekend, with the mortgage issue high on the agenda.

"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 commonplace," Mr Perry said.

"Together, this has the potential to push the country deeper into recession."

Unsold property

Rics found that the number of members reporting sliding prices had eased a little, with 73.5% more of its members seeing prices fall locally than rise - the lowest level since February.

However, confidence in house prices in the months ahead fell to its worst level since April 2008, with nine out of 10 Rics members in England and Wales reporting a fall in price expectations.

Large supplies of unsold properties and the number of buyers able to get access to financing were the main depressing factors, the group said.

Estate agents in London were having the hardest time, selling an average of only seven properties in the three months to the end of December, while agents in the South East and South West were averaging nine sales.

Estate agents in the East Midlands reported the strongest showing, selling an average of 15 homes in the last three months of 2008.

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