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Housing market 'stuck in doldrums'

The housing market remains "stuck in the doldrums" as first-time buyers struggle to get a foothold, surveyors have said.

Activity levels declined in June, according to a poll by the Royal Institution of Chartered Surveyors (RICS), with the weakest readings for new buyer inquiries and new instructions for more than a year-and-a-half.

RICS revealed that some 22% more surveyors reported price falls rather than rises in June, compared to 17% the previous month, in its weakest reading since October.

And expectations for prices over the next 12 months fell further into negative territory, although the volume of transactions is expected to remain broadly flat.

The market has been hit by the end of a stamp duty holiday for first-time buyers in March, offsetting the introduction of the Government-backed NewBuy scheme designed to encourage the return of 95% mortgages.

RICS chief economist Simon Rubinsohn warned activity levels will not significantly pick up until lenders demand smaller deposits from first-time buyers and offer lower interest rates to borrowers with small deposits.

He said: "The housing market didn't manage to turn a corner last month and activity remained in the doldrums. Although there is some positivity that the amount of sales going through is going to see an increase, it is unlikely that we will see any real movement until purchasing a property is more affordable and accessible for the likes of first-time buyers."

The survey came despite housebuilders having enjoyed a rise in sales and profits in recent months, with Bovis Homes reporting an 18% jump in completions to 944 in the first six months of 2012.

But like many housebuilders, its gains have mainly come through focusing on building larger family homes in the south of England as it seeks to reduce its exposure to first-time buyers struggling to clamber on to the ladder.

The housing market has struggled since a stamp duty holiday for first-time buyers was withdrawn at the end of March, and as confidence was hit by the weakening economy and the ongoing eurozone debt crisis.


From Belfast Telegraph