House sales down by a third, says Countrywide agency

The number of house sales has collapsed by a third in the first two months of the year, according to one of the country's biggest estate agents.

Countrywide Assured claimed a "buyers' strike" has set in, with the most expensive areas of central London seeing up to two-thirds fewer transactions.

The news – which sent Countrywide shares down 14 per cent yesterday – will be seized upon as evidence that the housing market is set to cool dramatically, even though the latest house price surveys have shown continued spectacular growth.

Harry Hill, Countrywide's managing director, said the downturn in sales began suddenly after his agents returned from Christmas holidays and most areas of the country proved more challenging than at the start of last year.

He said: "Volumes in Scotland are about the same; in the north of England they are down about 5 per cent, and every 50 miles further south you go it gets proportionally worse. By the time you get to Kensington High Street volumes are 65 per cent down on last year."

Countrywide has about 8 per cent of the UK market, through regional brands including John D Wood, and Dixons in the Midlands.

Mr Hill said it was too early to be sure if the downturn would persist, and said the low interest rate environment and demographic trends could continue to support the market. "With City professionals losing their jobs, you can easily imagine why there is weakness at the top end of the London market. It is slightly more difficult to see why the people of Truro, or Norwich, or Milton Keynes are keeping their hands in their pockets.

"Maybe it is the threat of war. Maybe it is because they are seeing people with gas masks practising for a terrorist attack on the front of the papers. Maybe they believe that house prices have ridden up to the top of the market and they are determined they are not going to buy at the top. Maybe it is a combination of all of those."

Earlier this week, the International Monetary Fund said Britain was in the throes of a "house price bubble" that could burst with serious consequences for the economy.

The latest evidence from mortgage lenders is that house prices have continued their gallop this year. Halifax said on Monday that the price of the average house jumped 1.7 per cent in February. That gives an annual house price inflation of 23 per cent.