House transactions slump to record low

THE number of people moving house has hit the lowest level since the Royal Institute of Chartered Surveyors (RICS) started compiling records 30 years ago.

The latest RICS snapshot of the market showed that there were just 15.3 transactions per surveyor during the three months to June 30, the lowest level since records began in 1978.

The sharp drop has been blamed on the credit crunch, which has left many potential buyers unable to get a mortgage as lenders increase rates and cut their maximum loan-to-value rates.

The news came as it was announced that JCB is to cut 500 jobs in the UK in response to the downturn in the building industry. It is the first big hit the manufacturing industry has taken as a result of the economic slowdown.

The RICS survey reported that 35 per cent more surveyors saw a fall in inquiries from buyers, rather than a rise, in June.

There were also reports that buy-to-let investors were entering the markets, to take advantage of rising rent levels. And surveyors have also seen "predatory buyers" – people closely following the market to take advantage of falling property prices.

RICS spokesman Jeremy Leaf said: "With demand so low, would-be buyers are negotiating from a position of strength. Even in a weak market there are always opportunities for investors and buyers.

"However, transaction levels remain incredibly low, with many buyers cut out of the process by tight lending conditions."

There were few reports of "distressed" sales by people desperate to cash-in on their property or avoid repossession due to difficulty meeting mortgage payments and fewer surveyors reported a fall in house prices.

There were 88 per cent of surveyors reporting a fall, rather than a rise, in house prices in June, down from 92.2 per cent in May.

The UK housing market is still facing a bleak future, however, with the job cuts at JCB a further indication of the spreading financial problems.

The company, owned by the Bamford family, said there had been a "rapid decline" in orders, resulting in a 20 per cent reduction in scheduled production.

The company said the job losses would be spread across its UK operations, which are mostly based in the Midlands.

Matthew Taylor, chief executive, said: "Many JCB dealers around the world are experiencing lower sales rates. We do not expect to see a recovery until late-2009 at the earliest."

Howard Archer, chief UK and European economist for Global Insight, said the latest RICS figures, and the continued fall-out from the credit crunch, meant they now expected house prices to fall by up to 26 per cent by the end of 2009.

"The marked deterioration in sentiment over the housing market heightens the risk that house prices will fall sharply over the next couple of years," he said.