· Estate agents average one deal a week as prices fall
· Rics calls for tax-free cash help for first-time buyers
The government is being urged to act swiftly to help drag the ailing property industry up off its knees as housing sales slow to their worst level in three decades and prices continue to decline.
According to the Royal Institution of Chartered Surveyors (Rics), sales were at their lowest level for 30 years in the three months to July, with estate agents averaging just over one property sale a week. RICS says “significant and decisive action” is needed to pull the market out of the doldrums and wants the government to help improve the supply of mortgage funds.
The Rics plea comes as the latest survey from the property intelligence group Hometrack shows that UK house prices fell for the 11th month in a row in August as banks continued to tighten lending conditions in the midst of the credit crunch.
Hometrack said the average price of a house in Britain was down by 0.9% over the month, compared with a 1.2% fall in July. Average prices were down by 5.3% in the year to August, the lowest level since the survey began in 2001.
Last week, Nationwide reported a 1.9% fall for August, taking the annual decline into double digits for the first time since the autumn of 1990. The 10.5% annual drop has shaved almost £20,000 off the cost of the average home and returned prices to their level of two years ago.
Richard Donnell, director of research at Hometrack, said: “When the market turns it can take as long as 24 to 36 months for prices to reach realistic levels and we are now well into this process. We may start to see a moderation in the rate of monthly price falls. However, with ever growing uncertainty among households over the broader economic outlook, the repricing of housing still has some way to run.”
The survey found average prices down across more than half the country for the fifth month in a row. The biggest drop was in Greater London, where average prices fell 1.1% to £296,600.
Rics is calling for the government to tackle mortgage liquidity and “incentivise the issuance of new mortgage-backed securities and covered bonds to give investors the confidence to return to the market”.
The British Bankers’ Association said last week that mortgage approvals had plummeted 65% in the past 12 months. Only 22,448 mortgages were approved in July, compared with 64,184 in July last year, as lenders continued to restrict mortgage availability and house values fell.
Rics is also asking the government to establish a tax-free savings account supported by government contributions to help first time buyers save for a deposit.
Gillian Charlesworth, spokeswoman for Rics, said: “We know there is no silver bullet that will slay this monster, but we need a joined-up, comprehensive approach to bring back confidence and give the public clarity about what is available. While we wait for the government to act, many home owners are trapped in a market offering little or no mobility without any prospect of good cheer in the autumn.”
Kathryn Hopkins
Monday September 1 2008
Source: The Guardian