Property Prices Look Set For Further Falls

Mortgages and Home

Updated on 17 February 2009 | 10 Comments

The latest industry figures show that property sales are continuing to fall....

The latest property figures have been released today. Overall it looks like property prices will continue to fall for a while.

According to the latest survey from the Royal Institution of Chartered Surveyors (RICS), the average number of property sales fell again in October, as a lack of mortgage finance continued to prevent buyers from accessing the market.

Over the last three months, the average number of sales per surveyor has dropped to 10.9, the lowest level since records began in 1978. London remains at the bottom of the activity league, with just 6.4 sales per surveyor on average.

However, some estate agents are becoming more optimistic - sales expectations have hit their best level since March 2007. 20% more chartered surveyors expect an upturn in sales over the next three months, up from 4% in September. Sellers are said to be reducing asking prices to realistic levels and cash rich investors are searching for investment opportunities.

First-time buyers still finding it tough

Unfortunately figures from the Council of Mortgage Lenders (CML) reveal that first-time buyers are still finding it hard to get on the property ladder, with only 13,400 first-time buyers entering the market in September, as opposed to 28,200 a year earlier.

First-time buyers also borrowed less in September, borrowing an average of £104,500 compared to £108,000 in August. The amount borrowed has been steadily declining since peaking at £119,250 in July 2007.

First-time buyers, who normally don't have large deposits, have been particularly badly hit by the credit crunch. If you have a low loan-to-value (LTV), say 60%, you can still get a good deal. But if you only have a small deposit and a high LTV (say 95%), you'll find it much harder to get a good deal compared to two years ago.

Overall, RICS believes further property price falls are likely. Of course, falling house prices are good news for some people. If you're a potential first-time buyer or thinking of trading up, lower prices are good!

More: The Right Mortgage: Discount Vs Trackers | How Will The Rate Cut Affect Your Mortgage

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