It now takes an average of 10 weeks to sell a property as the housing market downturn sees a 52% reduction in the number of new buyers.
New figures from Hometrack show that house prices fell for the ninth month in a row in June, with average properties down by 1% over the month and 2.5% over the first half of 2008. The annual rate of house price falls in now 3.2%.
Hometrack also reports a 52% reduction in the number of new buyers since the start of the credit crunch. And despite a fall in the number of new properties coming onto the market, it now takes an average of 10.3 weeks to sell a property, up from six weeks in June last year.
Richard Donnell, a director at Hometrack, says the summer months always see a drop in transaction volumes – but he warns this year, the fall is different: "This drop in volumes was always possible as around half of all transactions in recent years have been driven by aspirational or non-needs based movers who are now sitting on their hands.
"The net result is a sizeable drop in transaction volumes which look set to reach levels not seen since the 1970s."
The Bank of England’s latest lending data shows mortgage lending fell month during May. Loans for house purchase totalled £5.8 billion during the month, down from £8.2 billion in April and £10.4 billion in February. Remortgage loans also fell, to £12.1 billion from £13.5 billion the previous month.
Last week, the Land Registry reported that house prices remained steady in May. The figures, which are based upon completed property sales, show that the average house price across England and Wales remained unchanged at £183,266, although annual house price growth fell for the ninth consecutive month to 1.8%.
The East Midlands saw the greatest monthly increase, with house prices rising by 1.1%, but it was in the North East where prices suffered the worst monthly fall, declining by 2.4%.
The Land Registry figures suggest London continues to lead the rest of the UK for house price growth, seeing prices rise by 0.8% in May and taking the average price of a property in the capital to £354,714. However, Rightmove reports that prices fell in the capital by 1.3% during May.
The Land Registry’s data also shows that the number of house sales was just 53,080 in March, a 50% decline from the 106,047 recorded sales in March 2007. Such a fall confirms the view that homeowners are choosing to stay put rather than move.
According to Paragon Mortgages, landlords have experienced a sharp increase in tenant demand since the beginning of the year and over half are predicting that demand will grow further over the next 12 months.
John Heron, managing director of Paragon Mortgages, says: “The latest figures from the Land Registry confirm that people are postponing house purchases because they are either uneasy about the current market or simply can't get a mortgage. These people need somewhere to live so they are either staying in their existing property or renting.”