Property market remained stagnant in 2011

| January 25, 2012 | 0 Comments
Property market remained stagnant in 2011

House sales fell 1 per cent in 2011, with just 869,000 residential properties sold, according to HM Revenue and Customs (HMRC).

In January 2011, traditionally the weakest month for property transactions, just 45,000 houses were sold.

However, the market did improve at the end of the year, with 76,000 sold in December.

The property market has been in a slump for the last three years, with high inflation, high unemployment and stringent lending criteria making it impossible for many people to afford to buy their first home or move house.

Many first-time buyers are unable to raise the high deposits demanded by mortgage lenders, leaving them trapped in expensive rental properties.

Property sales in 2011 were around 50 per cent lower than they were in 2007, prior to the onset of the credit crunch and were nearing the record low level of 2009, when just 848,000 homes were sold.

The Council of Mortgage Lenders expects total lending to fall again in 2012, suggesting a further fall in house sales is likely.

Official figures released last week by the Department for Communities and Local Government (DCLG) revealed house prices fell by 0.3% in the year to November 2011.

The average UK house price ended the year at £205,796.

However, house prices increased by 0.7 per cent for first-time buyers and the price of new properties increased by 7.7% on average, compared with 2010.

The DCLG’s figures also indicated that the North/South divide in house prices is widening, with the North West experiencing the largest fall in property prices while the smallest was in the South East.

High inflation and rising unemployment are expected to lead to a substantial increase in home repossessions this year.

The Council of Mortgage Lenders expects a 22 per cent rise in repossessions in 2012 to 45,000.

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