House Sales Down in May 2012

by Mark Johnston

The ongoing economic uncertainty in the UK and destabilising effect of the euro zone crisis has continued to dampen confidence in the market.

The results in most parts of the country are consistent with prices edging downwards in May 2012. However, the capital once again outperformed the rest of the country reporting increases rather decreasing prices.

According to the Royal Institute of Chartered Surveyors (RICS) house sales have plummeted by almost 40% since the peak of the boom 5 years ago.

There were 51,823 approvals for house purchases in April 2012, a 1.5% increase on March, but this is still below the previous 6 month average.

Just over 15 completed sales were made per surveyor in the 3 months to May, a drop on around 25 sales made over the same period in 2007. Also during the 3months to May, surveyors sold 23% of the homes on their books, compared with 41% in the same period in 2007.

House prices have continued to decrease generally in May as 16% more surveyors reported falls rather than rises, a reading which has remained negative since June 2010.

Data has also shown that the time taken to sell a home has increased significantly over the same period.

Lenders have again tightened their borrowing criteria and several have raised their standard variable rates (SVR) amid the weak economy and the ongoing euro zone crisis, therefore this reluctance from banks and building societies to offer people more affordable mortgages is behind the ‘stagnant’ market.

The Royal Institute of Chartered Surveyors (RICS) housing spokesman, Peter Bolton King, recently said “ongoing economic instability in the UK and overseas has continued to undermine consumer confidence”.

However, it is not all doom and gloom as those potential borrowers with a healthy deposit or equity in their home and a good credit history should be able to secure some extremely competitive deals at present.

Also according to the latest credit conditions survey from the Bank of England some lenders are planning to introduce more deals to help those with small deposits over the next 3 months, although exactly what these deals will be is yet unknown.

On area expected to grow this year however is the buy to let market as lenders seem keen to exploit the boom in the rental market. As rents already stand at a record high and are expected to rise by a further 5% at least this year alone.

Many experts have predicted that property transactions through out theUKin 2012 are likely to remain flat. Some chartered surveyors do however expect transaction levels to see a slight upturn over the coming 3 months at least, but they still believe that future prices will remain squarely in negative territory.

Despite the fact that property is taking longer to sell on the market currently and that fact that buyer demand remains ‘flat’, the number of homes being put on to the market remains ‘stable’ according to estate agents.

Story link - House Sales Down in May 2012

Related stories to : House Sales Down in May 2012