UK house sales fell by 11k last year to one of the lowest totals on record, HMRC reveals

Published 24th Jan 2012

The UK housing market struggled again last year as just 869,000 residential properties were sold, according to figures released by HM Revenue and Customs (HMRC).

It means sales figures are well and truly still stuck in the doldrums, coming close to the record low in 2009, when just 848,000 homes were sold – the lowest since modern records began in 1978.

The figures reveal that the property market has been in a three-year slump, as sales remain at almost half the levels recorded in the run-up to the financial crisis in 2007.


In 2006 nearly 1.7million homes were sold, and in 2007 house sales were hovering just over the 1.6million mark.

Unsurprisingly, January – traditionally a low time for housing transactions – was the slowest month for house sales, with just 45,000 homes shifted in the UK in that month.

However, in some better news from the figures, house sales in December were at their highest level of the entire year, with 76,000 properties changing hands, as the market picked up at the tail-end of 2011.

Sales have been depressed by a combination of a lack of mortgage availability and high deposits requested by lenders.

Many potential first-time buyers are stuck in rental properties, struggling to scrape together a deposit to buy a house.


HOUSE SALES SINCE 2006
Year
Sales
2006
1,669,000
2007
1,618,000
2008
917,000
2009
848,000
2010
880,000
2011
869,000

Source: HMRC

Sales have also been impacted by the uneasy feeling surrounding the economy.

For instance, the latest unemployment figures revealed that 2.69million people are out of work – a 17 year high – and this is deterring potential home buyers from making a house purchase.

Paul Broadhead, head of mortgage policy at the Building Societies Association (BSA), said the reasons for the dip in house sales is down to a couple of barriers potential home buyers are facing.

He said: 'The ability for people to raise deposits is making it difficult to get on the housing ladder.

'Another factor is nervousness around job security. Many think it is a good time to buy at the moment, but with rising unemployment, not many want to take the leap.

'Due to some factors, including the eurozone problems, I think that in the next few years, we will continue to see a flat market in terms of house sales.'

David Hollingworth, mortgage expert at London & Country, echoes this view. He said: 'It paints a very gloomy picture. There has been an improvement in mortgage deals and competitiveness, but the size of the deposit needed is the major focus.

'Also, general uncertainty around the economy, such as the eurozone, means that it is unlikely lending will change much this year.

'It was an improving picture last year, but there is nothing you can really grab at the moment and transactions will remain low – and may dip lower than last year.'

Separate figures from property website Rightmove also paint a sorry picture of the UK housing market.

It found that the number of new homes for sale has slumped to its lowest point in more than a decade. Since the turn of the year, just 34,433 properties have come on to the market.

It appears there will be no let-up in the housing market in 2012. The Council of Mortgage Lenders (CML) says that total lending – to both buyers and people remortgaging – will fall this year, which means sales could fall even further and surpass the record low in 2009.

And the Financial Services Authority (FSA) is introducing new rules in 2013 to try to prevent lenders reverting to pre-2007 lending habits, which could have an even further detrimental impact on house sales.

It will ban mortgages where the loan is greater than the value of the property. It will also stop lending to people who can’t prove they have large enough incomes to repay their loans.

Adrian Coles, director-general at the BSA, believes the property market has totally changed in recent years.

He said to the BBC: ‘This is not just a cyclical downturn where we will see a recovery in a year or two - there are some fundamental changes that have occurred.’

Source: ' ThisIsMoney '

View All Latest News