The number of properties changing hands fell by 13 per cent during May as the credit crunch continued to take its toll on the market, Government figures have shown.
Only 100,000 residential and commercial properties were sold for more than £40,000 during the month, 37 per cent less than in May 2007, and the lowest level since comparable HM Revenue & Customs figures began in April 2005.
The figures, which are seasonally adjusted, are unsurprising given the sharp fall in mortgage approvals for house purchase during April, with Bank of England figures showing these were down 49 per cent on a year earlier at a new record low of just 58,000.
But the steep fall in transactions during just one month shows the impact the credit crunch is continuing to have on the property market as people struggle to raise the finance they need, while falling house prices put people off buying a new property.
Figures released on Monday by property website Rightmove showed that estate agents now have a record 75 homes on their books as the market stagnates, while there are 15 properties on the market for every one successful buyer.
The Royal Institution of Chartered Surveyors (RICS) recently said the number of homes changing hands had slumped to a 30-year low, with estate agents selling an average of just 17 properties each during the three months to the end of May.
Simon Rubinsohn, chief economist at RICS, said: “These numbers clearly highlight the very real pressure on the residential property market.
Indeed, the RICS suspects that the level of activity will fall further over the coming months.
“A drop in property (sales) of this magnitude will have an impact on household spending on durable goods as well as on jobs with both estate agent and those working in ancillary areas increasingly under threat.”