What’s caused the slump in property sales?
July 22, 2008
There is little doubt that the number of properties being sold in the UK has slumped, and many homeowners are now finding it increasingly difficult to sell their homes, with estate agents reporting the poorest sales figures for many years. In fact, the situation has now reached a point where the lack of property sales could affect employment levels in a number of industries, with around fifteen thousand estate agents set to lose their jobs as well as those in related industries such as solicitors, removal firms, furniture retailers, and more.
But just why have property sales fallen to this degree? There has been much speculation over this matter amongst industry professionals, with many having differing views over why property sales have slumped. The global credit crunch is one of the factors that have been blamed, as this has resulted in tighter credit conditions and fewer mortgage products, which in turn has impacted on the ability of consumers to get an affordable mortgage to buy a property.
Another factor that has been blamed for the fall in property sales is the fall in house prices. Property values have been falling for some months, and this is putting many people off buying according to some officials. Whilst falling property prices would normally be good news for buyers that have been unable to afford to get onto the property ladder in the past few years due to rising prices, officials have predicted that the value of homes will continue to fall, and many are nervous that this could mean that they will quickly fall into negative equity if they decide to purchase now.
One official from the Council of Mortgage Lenders said: “We don’t see this as a demand-led reduction but a funding problem. At the moment it’s still seen as very much a supply-side problem.”
However, a spokesperson for Nationwide stated: “Affordability was beginning to bite before we had the trigger of the credit crunch. In the short term, the demand factors will dominate. People are not in a position to buy and that’s likely to be the case for some time.”
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