Home sales plunge to 30-year low

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by Kay Murchie

According to figures from the Royal Institution of Chartered Surveyors (Rics), home sales have plunged to their lowest levels since surveyors started collecting records in 1978.

In the three months to 30 June, estate agents said they sold an average of 15 properties - this is almost 40% lower compared with the same period last year.

Prospective buyers are deterred from the market as many of them are unable to obtain a mortgage due to the current mortgage freeze and those that can get a mortgage are charged hefty deposits. Buyers who do not have the funds for a deposit of over 5% will find it impossible to secure a mortgage deal.

At a time when house prices are falling, this is seen as an encouraging sign for first-time buyers, however tightening lending conditions is proving to be a problem for would-be buyers, according to Jeremy Leaf of Rics.

One estate agent in North Yorkshire said the squeeze on lending is having a devastating affect on the market.

However, the number of surveyors reporting house price falls was not quite as high in June as the previous month.

Surveyors reporting house price falls rather than increases was 88% in June, marginally better than the 92.2% reported in May. However, all surveyors in the West Midlands held the same view that prices were falling.

Last week, the Halifax reported that house prices in the UK fell by 2% last month, and prices are 6.1% lower than they were compared with this time last year.

Its rival, the Nationwide, said that house prices fell by 0.9% on average last month, with the average home costing 6.3% less than 12 months ago.

As a result of falling home sales, many estate agents are closing offices. The housing slowdown is also having an impact on housebuilders after Persimmon, Barratts, Bovis and Redrow Homes all announced job losses last week.