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Economic gloom drags down UK property market

Economic uncertainty and lack of mortgage finance have impacted on the level of property sales. The number of sales per surveyor over the three months to August dipped slightly to an average of 14 taking transactions back to June 2009 levels. Meanwhile, average stocks on surveyors’ books fell back to 67 from 70 in July.
August’s 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 with 79% citing this as the cause.

In addition, nearly three quarters of surveyors, 70%, 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.

Some 40% 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% 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% to 0%.
The sluggish market contributed to the downbeat pricing picture in August, with 23% more surveyors reporting prices fell rather than rose from 22% in July.

Price expectations also fell, as a net balance of 23% anticipated prices to decline rather than rise over the next three months. Interestingly sales expectations remain positive for the coming months at plus 17% with surveyors hopeful of a modest pick up in activity.
 ‘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 Commenting, 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,’ he added.