Market gets real as sales dry up

The average number of transactions per surveyor fell further in July as a lack of mortgage finance continued to weigh heavily on the market, the Royal Institute of Chartered Surveyors (RICS) has said.

Sales expectations have improved however, mostly driven by sellers beginning to offer more realistic asking prices, RICS added.

The RICS house price balance improved slightly for the third consecutive month but still remains at a significantly low level. 83.9 percent more Chartered Surveyors reported a fall than a rise in house prices, a decrease from 86.9 percent in June. The inability of many to secure mortgage finance is reflected in the collapse in transactions. The average number of transactions per surveyor (over the last three months) is now at 14.4, the lowest figure since the survey began and the net balance of newly agreed sales remains in negative territory.

Demand remains weak with the balance of surveyors reporting new buyer enquiries still at a low ebb. Last month, new buyer enquiries improved again with 27 percent more Chartered Surveyors reporting a fall than a rise compared to 35 percent in June and 50 percent in May. In June, surveyors reported that ‘predatory buyers’ were bargain hunting for property.

This month, surveyors report that ‘realism’ has returned to the market with many sellers dropping asking prices to more realistic levels. Indeed, sales expectations in some regions are becoming more optimistic, especially across the South of England and Yorkshire and Humberside.

New instructions to sell property edged closer to positive territory with 3 percent more Chartered Surveyors reporting a fall than a rise, up from 13 percent in June. The current period of economic weakness has led to higher levels of unemployment but the latest repossession figures still remain well below the levels seen in the early 1990’s.

Commenting, RICS spokesperson Ian Perry said: “The lack of mortgage finance has brought the housing market to a virtual standstill with first-time buyers rapidly becoming an endangered species. Going forward, there are signs that sales activity might pick up a little as sellers start to re-evaluate unrealistic asking prices. However, the current confused messages from the Government regarding stamp duty risks damaging any returning confidence and may discourage mobility.”