Mortgage scarcity contributes to fall in house sales
The Royal Institute of Chartered Surveyors (RICS) has recorded a 40 per cent fall in house sales since 2007, and says that the lack of affordable mortgages has been a key factor in the decline.
RICs’ agents have reported around 15 sales per surveyor per month, compared with 25 sales per month in 2007 when the property market was booming.
In the three months to May, surveyors sold 23.1 per cent of the properties on their books, compared with 40.9 per cent in the three months to May 2007.
As well as the mortgage scarcity, consumer confidence has plummeted due to economic uncertainty in the UK, high unemployment and the eurozone crisis.
Peter Bolton King, from RICS said: “It’s no surprise to see such a sizable drop in transactions since the market peak back in 2007.
“Ongoing economic instability in the UK and overseas has continued to undermine consumer confidence, and the reluctance of many banks to offer affordable mortgage products has created something of a stagnant market.”
Since the credit crunch, lenders have tightened their borrowing criteria and many potential home owners are unable to afford the high deposits required to secure a mortgage.
Some lenders have also increased their standard variable rates by up to 0.3 percentage points for both new and existing borrowers, while associated costs have soared.
The latest figures from Moneyfacts.co.uk show that mortgage fees have increased by 70 per cent over the past three years, with the average cost of a securing a home loan now standing at £1,511, compared with £878 in 2009.
RICS also reported a fall in house prices in May, continuing a downward trend which started in June 2010.
The only region to report an increase in house prices was London, where there is strong demand from overseas buyers.