House sales dry up to one a week
Estate agents are selling less than one property a week in some regions of the country as a lack of mortgage finance continues to restrict people’s ability to buy a property.
The latest data from the Royal Institution of Chartered Surveyors (RICS) reports that the average number of sales over the past three months is now at 12.7 per surveyor, the lowest figure since the survey began. And in some regions, estate agents are reporting less than one sale per week.
RICS also reports that many sellers dropped their asking price during the summer months in order to attract the limited number of potential buyers, but despite this having the desired effect in June and July, sales stalled in the traditionally weak month of August.
Jeremy Leaf, spokesman for RICS, says a lack of mortgage finance remains the key factor in low levels of sales.
The latest mortgage data from lenders shows that during July, the number of loans for house purchases remained steady, although first-time buyer loans continued to fall.
Although there was been little change in mortgage activity between June and July, the Council of Mortgage Lenders (CML) reports a 51% fall in the number of new loans since July last year. The value of new mortgages has also more than halved during the past 12 months.
Michael Coogan, director general of the CML, says many buyers are waiting for house prices to stabilise before they make efforts to get on the ladder.
RICS’ Leaf adds: "The government’s stamp duty policy will not be enough to kick-start transactions and is more likely to assist buy-to-let investors with better access to finance than the first-time buyers it was aimed at.
“More needs to be done to reinvigorate a market whose confidence has taken a severe knock.”
The RICS survey suggests that house price falls are being driven by a lack of demand rather than by sellers dropping their prices.
Peter Newland, an economist at Lehman Brothers, says a lack of demand was a significant factor during the early 1990s house price crash.
He adds: “The drop in August may have partly reflected anticipation of the government initiatives for the housing market outlined last week. However, the small increase in the stamp duty threshold is very unlikely to boost demand significantly in our view and so further house price declines look very likely.”
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A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.
The catch-all term applied to investors who buy properties with the sole intention of letting them to tenants rather than living in them themselves, with the proceeds from the let usually used for the repayment of the mortgage. Buy-to-let investors have to take out specialised mortgages that carry higher interest rates and require a much bigger deposit than a standard mortgage. Other expenditure can include legal fees, income tax (on the rental profits you make), capital gains tax (if you sell the property) and “void” periods when the property is unlet.