House prices still falling
According to a recent survey from the Royal Institute of Chartered Surveyors, house prices across the UK continued to fall for the month of December, with the average number of sales per month per estate agent also falling in the final quarter of last year.
Officials from RICS said that the sales number were the lowest since it started records over thirty years ago.
House price falls are said to have gathered pace over the autumn, according to government data. However, the RICS report showed that as a result of lower house prices and dramatic falls in the base interest rate the number of enquiries from would be buyers actually increased for the period.
However, despite this encouraging news officials have said that as a result of decreasing availability of mortgage finance the number of property sales is likely to stay low for some time.
Another reason why many potential buyers may be nervous about entering the market, other than the lack of mortgages, is because house prices have plummeted over the past year and are set to continue falling, so many may be fearful of falling into negative equity. In addition to property sales falling the number of new properties being built by housing construction companies has also plummeted due to lack of demand.
One official from RICS said: “Buyer interest is now at levels not seen since 2006 but without mortgage finance the housing market is at a standstill and transaction levels at an all-time low. First-time buyers and owner-occupiers are now stuck in a market which does not fulfil their aspirations.”
He said that it was important that the issue with mortgages was sorted out by the government and the banking industry, adding: “Without this help, there is a real danger that homebuyers will be frozen out of the market, transaction levels and prices will fall to new lows, repossessions will increase and negative equity will become commonplace. Together, this has the potential to push the country deeper into recession.”
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