So how ‘soft’ can the market go? Well, officially it’s pretty flaccid right now. Land Registry figures (which are the most reliable data to be found) show that, in July 2008, house prices in England and Wales fell by two per cent when compared with July 2007, taking the average price of a home to £178,364.
The month-on-month decline from June’s average house price of £179,455 stood at 0.6 per cent. More worryingly, the most up to date Land Registry figures show that in May 2008 the number of completed house sales fell by 43 per cent to 61,038 from 107,986 in May 2007.
If that’s only a fairly shocking indication of how the market has declined, the number of mortgages approved to finance house purchases was 71 per cent lower in July 2008 than it was a year earlier, according to the Bank of England. Ouch!
Given the falling prices, it is understandable that those who do not have to move are staying put. But in doing so it creates a ‘vicious circle’ where the whole market begins to freeze.
This is being borne out in London, where a report by property portal Globrix reveals more than half the properties for sale have been on the market for longer than three months, an increase of nearly 20 per cent since the beginning of 2008.
Daniel Lee of Globrix said: ‘The London market has pretty much ground to a halt. Transaction levels are the lowest on record so a significant proportion of properties are just languishing unsold.’
The government’s efforts to kick start the market by offering incentives to first time buyers and stamp duty holidays on properties priced up to £175,000 has not been well received by everyone.
Peter Bolton King, chief executive of The National Association of Estate Agents (NAEA) said: ‘The government’s offer of interest free five years loans of up to 30 per cent of the property’s value when buying a new home from developers discriminates against the second-hand market where properties will continue to stagnate.’
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