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Economic gloom holding back housing market

Economic gloom holding back housing market

Category: Mortgages

Updated: 13/09/2011
First Published: 13/09/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Economic uncertainty and difficulties in securing a mortgage meant the UK housing market remained subdued during August, the latest survey from the Royal Institution of Chartered Surveyors (RICS) has revealed.

Property sales fell to a 26 month low last month, with just 14 homes being sold per estate agent over the three months to August, a level not seen since June 2009.

At the same time, some prospective sellers seemed to be taking their properties off the market, with agents having on average just 67 homes on their books, compared with 70 in July.

Interest from new buyers fell back during the month, while new instructions to put properties up for sale improved slightly.

RICS said the sluggish nature of the market had contributed to a downbeat pricing picture in August, with more surveyors claiming house prices had fallen rather than increased.

Meanwhile, the latest data from Communities and Local Government also showed that prices have been slipping lower.

It revealed that average house prices were 0.7% lower over the three months to July, compared to a quarterly decrease of 0.2% over the three months to April.

Despite rising by 0.3% in July, prices in the UK were still said to be 1.5% lower than a year earlier.

"For the time being, our indicators suggest that demand for homes remain broadly steady, albeit at relatively low levels, despite the renewed bout of economic gloom," said RICS housing spokesperson, Alan Collett.

"However, the risk is that the worsening economic picture will gradually begin to have a more material impact on sentiment and discourage potential house purchasers even where mortgage finance is available."

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