Housing 'worst for a decade'

The housing market is heading for its worst year for a decade with sales volumes diving and price growth stalling, according to the latest figures.

Property website Rightmove said transaction levels in the first three months of the year were the lowest since 1995. And the picture remains grim in the West Midlands.

The pace of house price falls eased in the region in April, but the trend is still downwards, says the latest housing market survey from the Royal Institution of Chartered Surveyors.

Rightmove said house prices in England and Wales rose by just 0.3 per cent during the four weeks to May 7 to average £198,147.

Year- on- year prices were only 4 . 9 per cent higher than 2004, the smallest rise for almost a decade, and the group predicts growth will have stalled completely to hit zero per cent by July.

It added that, although the first quarter was traditionally the quietest time of the year, it did not think sales would pick up enough for transactions to equal the 1.14 million low reached in 1995, and it was possible that final numbers could be as little as 970,000, a level not seen since 1974.

Rightmove said the traditionally busy spring market had failed to reduce the number of properties agents had on their books, which now averaged 70 per agent, the highest number since its records began in 2001.

Sales volumes would only recover if affordability improved through either lower property prices, higher wages or lower interest rates, it added. But it stressed that prices were unlikely to fall, as high levels of employment meant few people were under pressure to sell.

Miles Shipside, of Rightmove, said: "While house prices will soon be the same as a year ago, this will be of little comfort to first-time buyers 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 and help fund existing and prospective homeowners to move regularly, otherwise the stagnation of volumes is likely to continue for several years."

West Midlands RICS surveyors reported a 12 per cent drop in price falls, down to 40 per cent in April from 52 per cent the previous month, with a further 58 per cent saying they had remained the same.

Housing spokesman Harvey Williams said: "We have witnessed a significant increase in the amount of properties for sale in the West Midlands. Compared to the same period in 2004 there are now 17 per cent more properties on agents' books, with five per cent more for sale in April than the month before.

"Fallout from MG Rover and Marconi has not yet worked its way through the system and only time will tell what effects these will have on the housing market."

Nationally, housing market activity is down 30 per cent compared to this time last year. Post-election fears over interest rate rises overrode any confidence from the improved jobs market.