Rightmove says house sales are at a 10-year low

Rightmove says house sales are at a 10-year low

Property sales have fallen to their lowest for a decade and will continue to slide for the rest of the year, according to property website Rightmove.

Sales are forecast to drop from a high of 1.4 million transactions a year to less than 1.1 million this year as uncertainty about the future direction of the economy and a refusal by house sellers to drop their prices continue to deter buyers.

The fall would knock almost £1bn from stamp duty receipts previously relied on by the Treasury and signal further misery for retailers who rely on trade from housebuyers.

Rightmove, which claims to advertise about 50% of all homes for sale in Britain, said the figures show both the volume of property transactions and the annual rate of increase heading for their worst levels for a decade.

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It said the data undermined arguments that the housing market was undergoing a soft landing.

"We anticipate a 0% year-on-year rate of increase by July with little movement upwards until buyer affordability improves," said a spokesman.

The annual rate of house price inflation fell from 7% to 4.9%, the lowest in almost a decade, it said.

With sellers not prepared to lower prices by enough to make properties more affordable, a gentle fall in prices would mask a collapse in the number of sales and a "hard landing" for the market as a whole, it argued.

"Sales are only likely to recover if buyer affordability improves through lower prices, rising wages, or falling interest rates," a spokesman said.

"Prices are still higher for buyers than a year ago and have been resistant to falls over the most recent six months - with a further £608 added to the average asking price this month.

"This resistance to sharp price drops looks likely to continue, given the lack of urgency among most sellers to sell. Fewer sellers are under pressure to sell due to high employment levels and seem able to cope with the burden of higher interest rates on their mortgage repayments - though partly to the detriment of retail spending in the high street which has seen a drop in spending," he said.

A review of the economy by HSBC published earlier this week drew the same conclusion, arguing that a slowdown in housing activity would provide a "negative shock" for consumer spending. Rightmove urged sellers and estate agents to drop their prices to help to improve affordability and market conditions.

The annual rate of increase according to its own figures has taken 10 months to fall from its peak (18% in July 2004), to 4.9% this month. Housing surveys by Halifax and Nationwide have also tracked downwards and both agree house sales have dropped dramatically.

But the website warned that some inflation was good for both the housing market and the economy and, after an initial dip, rising average earnings should be allowed to start pushing up prices again.

"While house prices will soon be the same as a year ago, this will be of little comfort to cash-strapped first-time buyers or or those struggling to move up the property ladder. Affordability should slowly improve as average wage rises outstrip house price inflation. In the longer term a return to gently rising prices will be important to encourage existing and prospective homeowners to move regularly, otherwise the stagnation of volumes is likely to continue for several years," said the spokesman.

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