The number of home repossession is expected to rise by 50 per cent this year, according to the Royal Institution of Chartered Surveyors (Rics).
Figures released by Rics today show that the number of properties offered at auction, usually an indication of distress, was close to historically high levels last year with 7,732 properties placed under the hammer.
However, a smaller proportion were reaching their reserves: in the fourth quarter of 2007, only 57 per cent of properties were disposed of successfully, compared to 69 per cent in the same period a year ago. The overall number of residential properties offered at auctions rose by 15 per cent in 2007, while the number of repossessed properties rose by around 20 per cent, indicating that many have struggled to service their mortgages following last year's interest rate hikes and tougher refinancing conditions.
There also seems to be an emerging "London effect". Success rates at auctions for London property fell to 63 per cent in the last few months of 2007, down from 80 per cent in the same period a year before.
Rics economist Oliver Gilmartin said: "Fears over further house price falls have taken some stimulus out of achieved sales at the auction house, as specialist lending has all but evaporated... we expect a tougher year for many at the margins in 2008 ..."
Last week, Nationwide Building Society reported a 0.5 per cent fall in house prices for February – a greater drop than the 0.3 per cent recorded in January. Year on year, Nationwide said that prices were now up just 2.7 per cent.