Economic Gloom Impacts On Housing Market

The UK housing market remained subdued during August, as economic uncertainty and lack of mortgage finance impacted on the level of property sales, says the latest RICS UK Housing Market survey.

The number of sales per surveyor over the three months to August dipped slightly to an average of 14 (on a seasonally adjusted basis), taking transactions back to June 2009 levels. Meanwhile, average stocks on surveyors’ books fell back to 67 (from 70 in July).

This month, respondents were also asked for the reasons why they felt sales levels continue to be subdued. The most commonly cited reason for this was general economic uncertainty (79 per cent). In addition, nearly three quarters of surveyors (70 per cent) felt a lack of mortgage finance was impacting negatively on transactions.

This certainly seems to be borne out in the number of first-time buyers who are still struggling to get a foot on the property ladder. 40 per cent of respondents added that fears over house price falls were affecting transaction levels, as many buyers and sellers stay away from the market while they wait for things to improve.

New buyer enquiries, which signal buyer demand, fell back in August as 3 per cent more chartered surveyors reported a decrease rather than an increase. Meanwhile, new instructions, which indicate supply levels to the market, moved from a net balance of -8 per cent to 0 per cent.

Alan Collett, RICS Housing Spokesperson, said: "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. 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."