UK Housing Market Hit by Falling Sales and Prices

The value of residential property in the UK continued to fall in May, while the number of completed sales was also down...

The value of residential property in the UK continued to fall in May, while the number of completed sales was also down. In its latest UK Housing Market Survey, the Royal Institution of Chartered Surveyors (Rics) pointed out the volume of real estate transactions is now almost 40 per cent lower than it was in May 2007. In addition, the homes that are on the market are taking much longer to sell than they did five years ago, with the surveyors questioned only shifting a typical 23.1 per cent of the properties on their books in May, compared to 40.9 per cent in the same month in 2007.

While the majority of the UK's regions all experienced this downward trend, some have been hit harder than others. In the north-east, for instance, the number of house sales per surveyor has dropped by 62 per cent and the outlook for prices remains in negative territory, as it does for most of the nation. Rics housing spokesperson Peter Bolton King said it is "no surprise" that transaction levels have fallen so dramatically around the country since the market peaked five years ago. "Ongoing economic instability in the UK and overseas has continued to undermine consumer confidence, and the reluctance of many banks to offer affordable mortgage products has created something of a stagnant market," he explained.

However, he was optimistic about the future, noting the majority of surveyors expect sales volumes to increase over the coming months, even if prices continue to exhibit a downward trend. There are indications prices may start to recover, though, with the most recent Nationwide House Price Index revealing residential property values increased by 0.3 per cent in May, compared to April. Annually, the cost of buying a home is still down, with a decline of 0.7 per cent recorded. The average house price in the UK currently stands at GBP 166,022, according to the financial institution. Robert Gardner, chief economist at Nationwide, is not overly concerned about the slide in values, though. He stated: "Demand for homes remains subdued on the back of weak labour market conditions, but the lack of homes coming on to the market is providing support for prices."

- Thursday 14 June 2012

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