Assetsure News 14th October 2008

Home Sales at 30 Year Low

Struggling homeowners received more bad news today as the September house price figures showed that UK home values fell by their fastest rate in over 30 years, indicating that the property slump still has some way to go until the bottom of the market has been reached. Home sales by volume are down 50% from one year ago and at their Lowest level since 1978, according to RICS.  surveys have reported that the lack of mortgage finance stifled access to the housing market and that the average number of home inspections by it's surveyors had dropped to it's lowest level in 30 years.  The survey by the Royal Institute of Chartered Surveyors, which found the average number of completed sales per surveyor over the last three month fell to it's lowest level in at least 30 years. The survey found the net balance of surveyors reporting falling rather than rising prices fell in August.

Economists predict that UK will slide into a recession in the second half of the year and in all probability will mean a further reduction in home owners property values. This is extremely bad news for home owners who are already having to deal with increased cost of fuel and food. There is also evidence that homeowners are shopping around more for UK home insurance in order to compare and contrast insurance providers in order to obtain the best deal.

The dramatic collapse of major institutions around the world and equally dramatic government bailout is as shocked stock markets in all western economies.  The liquidity crisis continues to affect the real economy as developers struggled to declare profits, unemployment in the property sector continued to rise and millions of potential first-time buyers are continuing to choose to rent in this difficult period.

The credit crunch has all but said mortgage approvals with the exception of existing homeowners with large equity or deposits to remortgage. 'As it stands, only those with significant finances are in a position to access the market," RICS spokesman Jeremy Leaf said. The fear, uncertainty and doubt created by the liquidity crisis has stopped interbank lending until the short-term crisis can be resolved via government intervention.  Mortgage lending to first-time buyers has plunged by 55% to a record low as estate agents reported that there were now selling less than one home a week, on average.

Mortgage lenders and banks approved just 15,600 first time in buyers compared to 34,800 same time last year, according to the Council of mortgage lenders. This is putting thousands of estate agents out of business as they struggle to cope between boom and bust. Total mortgage lending which include remortgaging from existing homeowners fell by incredible 63% in August.    The only good news has come from regional reports across the UK in areas like the South West where surveyors have reported slight price increases.   Overall though it is likely that the house price falls will mean that over 2 million people are now in negative equity and will lose money if they have to sell their homes.