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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