UK property market faces downturn

The number of residential units sold in Britain dropped by 4,000 to 77,000 homes in August, according to seasonally-adjusted data from the government, suggesting that confidence in the market remains fragile.

So far, the government data indicated that transactions this year are running below historical levels.

Monthly transactions peaked at 151,000 in January 2007 and dropped to as low as 53,000 in November 2008 in the wake of the credit crisis. Average transactions recorded between 2006 and 2007 reached more than 130,000 a month.

Several surveys showed that home prices, which recovered strongly at end-2009, have cooled in recent months, with potential homebuyers holding off because of impending government cutbacks and lack of finances.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (RICS), said that “the data continues to demonstrate the subdued level of activity in the residential property sector.”
 
“The latest RICS survey shows sales expectations are improving. However, with mortgage finance still in short supply and little evidence of a meaningful shift in behaviour from lenders, it is hard to see this slightly more optimistic mood being translated into significant higher sales volumes.”