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UK house sales 'at 30-year low' Mortgage squeeze 'stifles' market
(38 minutes later)
The number of UK home sales has fallen to at least a 30-year low over the past three months, the Royal Institution of Chartered Surveyors (RICS) has said. A lack of available mortgages is "stifling" the housing market, according to the Royal Institution of Chartered Surveyors (Rics).
Average completed sales per RICS member fell to 10.9 between August and October, the lowest level since the body first compiled the data in 1978. It reported that the number of UK home sales has fallen to at least a 30-year low over the past three months.
The RICS blamed a lack of available mortgages "stifling" the market. The report came as figures from lenders showed that the number of loans for house purchases in the UK dropped by 15% in September compared with August.
However, the worst may now be over, as RICS said 20% of its members now expect sales to rise by the end of the year. That was 57% lower than September 2007, the Council of Mortgage Lenders said.
This compares with just 4% who said in September that they saw sales rising. Sales
Falling prices Average completed sales per Rics member fell to 10.9 between August and October, the lowest level since the body first compiled the data in 1978.
RICS said the growing optimism that sales would start to increase again was being driven by more sellers agreeing to drop their asking price. This affected house prices with 84% of its members reporting that prices fell between August and October, while 14% said prices were level, and 2% saw a rise.
Many vendors have finally started to accept current market conditions and are dropping their asking prices to achieve a sale RICS spokesperson Ian Perry Rics spokesperson Ian Perry said last week's decision by the Bank of England to cut interest rates to 3% from 4.5% would help to boost sales.
Yet it also added that it may also reflect expectations of an increase in the number of homes being repossessed.
Regarding house prices specifically, RICS said 84% of its members saw prices fall between August and October, while 14% said prices were level, and 2% saw a rise.
Lack of mortgages
RICS spokesperson Ian Perry said last week's decision by the Bank of England to cut interest rates to 3% from 4.5% would help to boost sales.
"Even so the general lack of mortgage finance remains a major blockage in the housing market for a large majority of would-be buyers," he said."Even so the general lack of mortgage finance remains a major blockage in the housing market for a large majority of would-be buyers," he said.
"Fortunately, many vendors have finally started to accept current market conditions and are dropping their asking prices to achieve a sale. This was backed up by the CML figures, also released on Tuesday, that showed 35,000 loans for house purchases were granted in September, down from 41,000 the previous month.
"Sales should increase in the coming months as more and more sellers understand that greater realism is the only way to make that long desired move." Recovery?
"The government should consider what other measures can be brought forward to enable the market to transact more easily," said CML director general, Michael Coogan.
"Banks and building societies do want to support homeowners, but they have limited funds available and are, quite reasonably, taking a prudent approach to risk.
"If the pricing and volume of interbank lending continues to improve, this should help the flow of mortgage lending."
UK housebuilder Taylor Wimpey said on Tuesday that it believed there would be no short-term recovery in the UK housing market.UK housebuilder Taylor Wimpey said on Tuesday that it believed there would be no short-term recovery in the UK housing market.
The company welcomed last week's rate cut, and said it was hopeful that if it was quickly passed on to consumers it would help the market to return to stability more quickly.The company welcomed last week's rate cut, and said it was hopeful that if it was quickly passed on to consumers it would help the market to return to stability more quickly.
"Increased mortgage availability and a return of customer confidence remain the key requirements for a sustained market recovery," Taylor Wimpey said."Increased mortgage availability and a return of customer confidence remain the key requirements for a sustained market recovery," Taylor Wimpey said.
Regional differences
RICS found that London had seen the biggest fall in sales, with members reporting an average of just 6.4 sales over the three months.
Sales were strongest in the North East of England, where each member completed 16 transactions.
Britain's biggest building society, the Nationwide, said on Monday that it expects house prices to continue to fall in 2009/10.