Property sales slump to lowest level since 2009

House sales dropped last month to their lowest level in more than two years, according to the Royal Institution of Chartered Surveyors.

Its August property figures showed that sales per surveyor over the three months to August fell to 14, a level last seen in June 2009. Surveyors blamed the "general economic uncertainty" for the sluggishness although a large proportion mentioned the lack of mortgage finance.

Official mortgage lending data published by the Financial Services Authority backed up that view. While new mortgage commitments in the second quarter of the year totalled £40bn, the figure was 3 per cent lower than the same quarter in 2010.

First-time buyers are still struggling to enter the market with the proportion of new loans combining a high loan-to-value and a high income multiple remaining at less than 1 per cent. Meanwhile the percentage of new loans at an LTV of more than 90 per cent is still below 2 per cent.

Fears over house price falls are deterring potential homeowners as well as putting people off selling homes, according to Rics. It said that many buyers and sellers are staying away from the market while they wait for things to improve.

Alan Collett, the housing spokesman at Rics said: "The risk is that the worsening economic picture will gradually begin to have a more material impact on sentiment and discourage potential house purchasers even where mortgage finance is available."

July figures from the Department for Communities and Local Government added to the gloom. Seasonally adjusted house prices fell 1.5 per cent year on year, although there was a 0.3 per cent rise month on month.

The average house price in July was £207,690. Prices paid by first-time buyers were 0.5 per cent lower than a year earlier while prices paid by former owner-occupiers fell by 1.9 per cent.

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