Housing market is faltering as property sales fell during August

Published 21st Sep 2010

House sales fell during August in a further indication that activity in the housing market is faltering, Government figures showed today.

Around 85,000 properties worth more than £40,000 were sold during the month, down from 90,000 in July, according to HM Revenue & Customs.

The figures are up on the 79,000 transactions that took place in August last year, but less then half of the 162,000 properties sold in August 2007, before the financial crisis impacted on the market - highlighting once more the current weak state of the housing market.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (RICS), said: 'The HMRC data continues to demonstrate the subdued level of activity in the residential property sector.'

The data comes the day after the Council of Mortgage Lenders said lending last month had fallen to its lowest level for August for a decade.

There is traditionally a dip in lending between July and August, but the latest drop was more pronounced than in previous years.

'Despite ongoing concerns about the prospects for the economy, the latest RICS Housing Market Survey showed sales expectations are improving,' Rubinsohn said.

'However, with mortgage finance still in short supply and little evidence of a meaningful shift in behaviour from lenders, it is hard to see this slightly more optimistic mood being translated into significant higher sales volumes.'

Today figures add to a run of gloomy data on the housing market, with Nationwide reporting price falls of 0.9 per cent during August.

Many potential buyers have adopted a 'wait and see approach' due to concerns about the state of the economy, job security and the impact of future tax rises.

This, combined with an increase in the number of homes coming on to the market, has helped to relieve the previous mis-match between supply and demand, which was one of the main factors that pushed up house prices during 2009.

The drop in activity seen since the beginning of this year has prompted some economists to predict the market could be heading for a double dip.

But others have said recent falls in house prices are not unhealthy as the recovery in the property market had got ahead of improvements in the wider economy.

Many commentators expect house prices to end this year at around the same level they started it, before trading sideways for much of 2011.

Source: ' Daily Mail '

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