Record low house sales

7:50am Tuesday 10th June 2008

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The number of homes changing hands has fallen to a record low as potential buyers continue to stay away from the market, the latest sales figures show.

The Royal Institution of Chartered Surveyors (RICS) said chartered surveyor estate agents sold an average of just 17.4 properties each during the three months to the end of May, the lowest figure since it began collecting data in 1978.

Potential buyers have become increasingly reluctant to commit to property purchases in recent months due to negative press reports of falling house prices and problems in the mortgage market.

But the RICS figures did offer some brighter news, with a slight decrease in the number of surveyors reporting house price falls for the first time in 10 months.

Around 92.9 per cent more surveyors said house prices had fallen during May, compared with those who thought they had risen, a slight improvement from the record 94.7 per cent more who reported falls in April. There was also a small improvement in the number of surveyors who reported a drop in buyer inquiries.

New buyer inquiries dropped for the 18th month in a row, but the proportion of surveyors reporting falls eased to 51 per cent more than those who saw a rise, compared with 69 per cent more in April.

The number of people putting their home up for sale fell for the fifth month in a row, with 26 per cent more surveyors seeing a drop off in new instructions than those who saw a rise, the second lowest figure since the question was first asked in 1999.

But the group said that there was also still no sign of distressed selling in the market, with few people forced to sell their home because they were unable to keep up with their mortgage or because the property had been repossessed.

It said that with mortgage arrears still low, until the economic downturn hits jobs, this lack of supply would prevent "significant declines" in house prices.

Surveyors' confidence in the outlook for the housing market improved marginally during May, with the number of surveyors expecting a further drop off in sales going forward easing slightly, while confidence in future prices rebounded from April's low, although there is still a widespread expectation that prices will fall further in the near term.