Frozen property market to continue 'well into 2012' as banks keep tight grip on lending

Published 23rd Nov 2010

Frozen property market to continue 'well into 2012' as banks keep tight grip on lending


Homeowners desperate to sell were warned today that Britain's property market will remain frozen until 2012 at the earliest.

Winkworth, a leading firm of estate agents, said it is expecting another slow year, with far fewer homes finding a buyer than during the boom years.

It will be the fourth year that millions of homeowners have faced a major battle to sell their property, a nightmare which began in 2008.

Many potential buyers are too broke to buy, too scared about what the future holds, or are keen to buy but cannot get a mortgage.

Dominic Agace, chief executive of Winkworth, said: 'We anticipate another low volume year in 2011 with transactions at a similar level to 2010.'

Official figures, from HM Revenue and Customs, show the number of property sales has collapsed since the credit crunch struck three years ago.

In 2007, nearly 1.3million properties were sold for more than £40,000 in Britain between January and September.

This year, just 667,000 - around half this number - have been sold during the same period.

Mr Agace said Winkworth used to sell around 4,500 properties every year in the years leading up to the credit crunch. Last year, it sold just 2,900 homes.

He said the country's mortgage famine, which is making it difficult or impossible for many young people to get a loan, is one of the most major problems.

The majority of young people who manage to get onto the property ladder have had help from their parents who give them money for a deposit, according to the Council of Mortgage Lenders.

Last week, it said that net mortgage lending will be just £9billion this year, the lowest level since 1980, a sign of the country's mortgage crisis.

Winkworth said 'the impact of austerity measures, especially outside of London' will be another major determinant of what happens next year.

In a blow for those who cannot afford to buy, the chain said it expects rents will keep on rising, up another five per cent.

It said there is an 'ongoing shortage of supply', forcing people who would prefer to buy but cannot afford to fulfil their dream, paying record rents.

The average rent has hit an all-time high of £691 per calendar month, according to a separate report from LSL Property Services.

Overall, Winkworth, which runs a chain of 88 estate agencies, said it expects prices will rise by five per cent in the 'prime' market. This is houses worth more than £700,000.

But the cost of 'less prime' properties, where prices have fallen more sharply, are likely to remain the same.

The latest report from Rightmove, the property website, also revealed evidence of the struggle to find a buyer.

The average property which is up for sale is staying on the market for a record-breaking length of time - 'more than 100' days, the longest amount of time needed to find a buyer.

In February, it was just over 60 days but it has been gradually climbing ever since to reach a new peak.

Miles Shipside, a director of Rightmove, said anybody who wants to sell urgently may need to slash their asking price to offer 'bargain basement prices.'

Over the last month, the average asking price has dropped by 3.2 per cent, the biggest monthly drop since December 2007, to £229,379, equal to a price cut of £7,470 in just four weeks.

Source: ' Daily Mail '

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