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Property sales still stuck in first gear

Wednesday, 25 January 2012 9:03 AM

Home sales fell to the second lowest total on record in 2011, according to figures from HM Revenue and Customs.

The agency said there were 869,000 completed sales in 2011, down by 11,000 on 2010. Since records began in 1978 only 2009 saw a lower total at 848,000.

And it means that sales in each of the last three years have been down by half compared with the levels seen before the credit crunch in 2007.

One big reason for the stagnation is restricted mortgage lending by the banks. The Council of Mortgage Lenders said yesterday that although the last few months of 2011 saw more mortgage lending 2012 was difficult to call because of the Eurozone crisis.

Geoff Mean, professor of economics at the University of Reading, told the BBC that the fall reflected several factors.

He said: "If you have very poor levels of credit availability, for first-time buyers and people moving home, you are going to get low levels of sales taking place.

"You would expect low levels of transactions taking place in any recession as well. Given we have very low levels of new construction activity, new transactions reflect sales of new dwellings, so if you have got low starts and completions you are going to get low transactions as well."

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