UK Property Sales to hit record low in 2009

According to the Financial Times, house sales are set to fall to a record low next year, with less than 700,000 homes expected to change hands. This equates to households in the UK moving just once every 31 years.

Hometrack, the housing market data provider, will say on Monday that prices are set to continue to fall next year by about 10 per cent on average, with a further fall of 3 per cent in 2010.It predicts that activity in the housing market is set to seize up further, with the volume of transactions to fall 12 per cent to 685,000, on top of a 45 per cent decline in sales volumes over 2008.

This would mean that turnover as a proportion of housing supply will be at record lows in 2009, with just 3.2 per cent of homes changing hands.

This equates to the average household moving once every 31 years, double the 15-year average over the past decade.

Hometrack's estimates of a peak-to-trough fall of 22 per cent puts it at the more optimistic end of forecasts, with some suggesting that house prices in the UK will fall up to 30 per cent or more. However, it says that prices for certain properties, such as one- and two-bed homes, will fall further.

This part of the market tends to be characterised by higher borrowing costs for those wanting to borrow at high loan to values, it says. Above-average price falls are also being seen in the new-build flats sector.

It predicts that net mortgage lending will grow by £15bn ($22bn) in 2009, significantly down from about £39bn in 2008, and less than a seventh of the peak of £107bn in 2007.

Hometrack believes that the level of repossessions will increase to 70,000, close to the record 1991 level of 75,500, and up from 45,000 in 2008.

It expects net mortgage lending, as well as the level of repossessions, to remain at these subdued levels throughout 2010.

Richard Donnell, Hometrack's director of research, said: "The housing market saw a total reversal of fortunes in 2008 as homeowners faced a crisis of confidence after a decade of buoyant market conditions ...

"What is clear is that a re-pricing of the housing sector is under way. Prices will remain under downward pressure for the foreseeable future against a backdrop of low turnover and a move away from aspirational to more needs-based pricing."

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