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Housing market at two-year low

The global recession has taken a chunk out of the value of most people's homes, as last month house sales dropped to a two-year low, according to the Royal Institute of Chartered Surveyors (Rics).

It spoke of the 'subdued' nature of the market, and blamed it on 'general economic uncertainty' after sales handled by each surveyor in the three months up until the end of August dropped to 14, the lowest level since June 2009.

Rics housing spokesperson, Alan Collett, said: 'For the time being our indicators suggest that demand for homes remains broadly steady, albeit at relatively low levels – despite the renewed bout of economic gloom.

'However, the risk is that the worsening economic picture will gradually begin to have a more material impact on sentiment and discourage potential house purchasers even where mortgage finance is available.'

However, London has managed to defy the economic woes to record a 0.9% year-on-year increase. Howard Archer, chief UK economist at IHS Global Insight, said: 'The modest monthly rise in house prices in July reported by the DCLG does not change our view that house prices are likely to fall by 5% through to mid-2012.

'It needs to be borne in mind that the DCLG provides lagging evidence on house prices as the office calculates its index at the time when mortgages are completed. Furthermore, the data are for July, while both the Nationwide and Halifax have reported significant house price falls in August.'

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