Housing turnover may dip to a new low
Monday 28 November 2011
A property analyst has warned that 2011 could see the lowest level of housing turnover in 40 years, as new figures showed prices dipped again in November.
Hometrack said 840,000 sales are expected this year - almost 50% lower than the figure for 2007, cementing expectations of the low milestone for 2011.
The analyst's latest housing survey showed that prices fell by 0.2% in November from the previous month, following another 0.2% tumble in October.
Prices are down by 2.3% year-on-year and have fallen every month since July 2010, apart from April this year when the market was flat with no change recorded.
Hometrack said prices are being propped up at the moment by people's reluctance to put their homes up for sale, creating a scarcity of supply.
Richard Donnell, director of research at Hometrack, said: "2011 looks set to register the lowest level of housing turnover for 40 years - a trend which Hometrack expects to continue into 2012.
"An expected 840,000 sales in 2011 is almost 50% lower than in 2007 and equates to the average private sector home changing hands every 26 years.
"This is creating a scarcity of housing and is acting as a support to pricing levels."
Hometrack said the tough economic backdrop means that only "committed sellers" are putting their homes on the market and meeting what buyers are prepared to pay in order to push sales through before Christmas.
It said that a weak UK economy coupled with eurozone turmoil had seen a "rapid reduction" in new houses coming on to the market, with 0.8% fewer property listings in November.
This is acting as a counter-balance to weakened demand, which fell by 2.2% in November, Hometrack said.
The average time for a house to stay on the market rose to 9.9 weeks in November, up from 9.8 weeks the previous month and the proportion of the asking price achieved remained relatively unchanged, standing at 92.5% this month.
The survey questions estate agents in England and Wales about achievable selling prices.
Prices were down in every region apart from Greater London, which recorded no change for the second month in a row.
The South West, East Midlands, Wales and North West have felt the greatest downward pressure on prices - all falling by 0.3% or above in November.
But Hometrack warned that looking ahead it was unlikely that London will escape the continued turmoil of the financial markets.
"When prices start to fall in the capital so the scale of headline price falls will start to accelerate," Hometrack said.
The Government unveiled a series of measures last week aiming to inject life back into the housing industry, including underwriting mortgages for first-time buyers.
It is hoped the scheme will allow people to buy newly built homes with deposits of around 5% rather than the 20% now regularly demanded by commercial lenders.
Ministers have denied the move risked stoking another borrowing boom and potentially saddling the taxpayer with multimillion-pound losses.
Fears have been growing of a "perfect storm" in housing, with construction at its lowest since the Second World War, mortgage lending tightly restricted, and rents stubbornly high.
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