(Images courtesy of thisismoney.co.uk
According to figures released by the Royal Institute of Chartered Surveyors (RICS), property sales are at their lowest level for 30 years. The number of sales being recorded by RICS agents are at their lowest since their records began in 1978. The amount of properties being sold by estate agents now stands at less than one per week with the average agency recording just 10.9 sales in the last three months. London has been the worst hit with RICS figures saying that agencies in the capital sold an average of just 6 in the same period.
The reason for this “major blockage in the housing market” is the lack of mortgage finance, say RICS. Council of Mortgage Lenders (CML) figures back this up by showing that loans for home purchase sunk to 34,900 in September, down 14% from August and a whopping 57% on the same month of last year. The number of approved mortgages peaked at 102,700 in August of 2007 and September 2008’s figure represents a mere 34% of this peak.
The RICS report is considered an important measure of current market activity and of future developments. Consequently, it could be good news that the members of RICS believe that the fall in homebuyers is slowing with many of its members predicting an upsurge in sales over the coming three months. RICS spokesman Ian Perry said: “Last week’s interest rate cut should certainly help to support the market now that lenders have agreed to pass on the reduction to borrowers”. He also commented on the fact that vendors starting to drop their prices to a more realistic level, to suit market conditions, will also drive up sales over the coming quarter.
Hot on the heels of RICS’s figures on poor house sales was the news that the UK’s biggest property website, Rightmove, was losing 300 estate agents each month. At its peak, one year ago, the site had 12,600 agents – it now has 10,700. Most of the 1,900 agents that have left the site have either gone bust or have been removed for failing to keep up the membership fees. The firm announced last month that they were axing 20% of their workforce to cut costs by £5m to cope with the property downturn. The number of new homes advertised on the site has gone down by 11% (due largely to the decision by two major developers to cease using the site) and although the number of enquiries has held up, actual sales were “very low”.
Although estimates suggest that the property advertising market has halved over the past 15 months, Rightmove believes that its business is more robust than most. The group, founded by Halifax, Countrywide & Connells estate agencies in 2001, said that the number of letting-only agents advertising on the site continued to increase – up by 25% on one year ago. The company has although recently introduced a 30% price hike for its rental service which is also helping to get it through a difficult market. However, according to an online poll, 75% of UK estate agents are threatening to boycott the website because of its sky-high fees. Apparently they can be as high as £500 per month, per estate agent and if the proposed boycott goes ahead it will leave the site a much less reliable source of information for homebuyers wanting to compare properties on the market.