Housing market 'still in a slump'

The housing market has been in decline for a year

UK property sales between December and February remained at their lowest level in at least 31 years, the country's surveyors have reported.

Nine homes were sold per surveyor in the three months, the lowest since the Royal Institution of Chartered Surveyors' (Rics) survey began in 1978.

This was despite the four consecutive months of rising enquiries by new buyers as affordability improved.

Meanwhile, house builders said construction may hit an 88-year low.

The National Housing Federation predicts the number of new homes built in England during the next financial year could slump by 50% to 70,000 - the least since 1921, excluding the war years.

"After years of boom, the housebuilding industry is lurching towards bust," said Ruth Davison, director of the Federation.

New buyers?

The prognosis is slightly less gloomy from Rics, which asks nearly 300 surveyors to comment on the state of the market every month.

We are facing one of the worst housing crises this country has ever seen - doing nothing is not an option Ruth Davison, National Housing Federation Send us your experiences

Its February survey concluded that enquiries from new buyers increased at the fastest pace since August 2006 - most notably in London, Wales and the South West of England.

This was prompted by the sharp cuts in interest rates and falling prices that have made a owning a home seem more affordable.

But potential buyers were still being hamstrung by the demands for high deposits by cautious banks.

"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," said Jeremy Leaf, of Rics.

This difficulty in obtaining a mortgage, as well as the state of the economy and people deciding to rent more, would keep activity in the market at all-time low levels, he added.

'Intervention needed'

Many more surveyors still expect prices to keep falling than rising, and although the outlook for sales was slightly brighter in February than January, it was still very low.

Mr Leaf called on the government to intervene in the stagnating market by guaranteeing mortgage lending.

The National Housing Federation also wants the government to get more involved in propping up house building.

It has suggested that the government commit £6.3bn to the industry to build 100,000 new social homes over the next two years in England, as struggling private builders are mothballing developments.

The government wants 240,000 new properties to be built every year by 2016, but building levels are currently falling rather than rising.

"We are facing one of the worst housing crises this country has ever seen - doing nothing is not an option," said Mrs Davison.

For the Conservatives, Shadow Housing Minister Grant Shapps said that it was time the government "adopted our plans to axe stamp duty for first-time buyers on properties up to £250,000 and help nine out of ten first-time buyers."