House sales have fallen to their lowest level in thirty years, with estate agents selling on average less than one per week.
Latest data from the Royal Institution on Chartered Surveyors (RICS) found that the average agent had sold just 11.5 homes in the last three months, the lowest figure since its survey began in 1978. Surprisingly, London saw the fewest sales, at an average of just eight during this period.
And the situation is unlikely to improve any time soon, with many would be sellers choosing to either rent out their home or simply sit tight in the face of further falls in property prices. According to RICS, 91% of surveyors reported a drop in prices in the last three months, while just 1% noted a rise.
And of course, things won’t have been helped by all the recent chaos in the wider market, with a number of banks briefly teetering on the brink of collapse.
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A glimmer of hope?
Yet despite the gloomy outlook, agents remain optimistic that sales will rise again soon, says RICS spokesperson Jeremy Leaf.
"The recent turmoil in the financial markets has dented confidence further but yesterday's announcement by the government that the re-capitalisation of banks will be accompanied by increased lending to homeowners raises the possibility that the lack of mortgage finance that has so damaged the housing market might be eased.
“The market has still yet to experience significant numbers of forced sales but surveyors are surprisingly optimistic that sales will increase over the next three months,” says Leaf, adding that, for the first time since June 2007, the net balance of surveyors expecting sales to improve turned positive.
“The housing market continues to hold its breath and unless mortgage liquidity improves, the market is likely to remain a dormant beast for some time to come.”
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FTBs still excluded
With most lenders hesitant to take on high risk customers, it is only those with significant finances who are currently in a position to access the housing market.
And this trend is likely to continue, with lenders demanding ever larger deposits and even turning away first time buyers (FTBs) altogether. Nationwide Building Society is the latest to choose this route, scrapping its entire FTB mortgage range.
These traditionally came with a loan to value of 90%, but this has now been changed to 85%, meaning customers will have to come up with at least a 15% deposit.
The nation’s biggest building society has further bad news for customers, announcing that it will hike its tracker mortgages by up to 0.61% in response to last week’s 0.5% cut in the base rate.
This means a two-year tracker for remortgage customers is now only available at 1.54% the base rate, compared to 0.94% before.
