Economic woes hit house prices and sales

HOUSE sales have plummeted by almost 40 per cent since the peak of the boom five years ago, according to the Royal Institution of Chartered Surveyors (RICS).

Just over 15 completed sales were made per surveyor in the three months to May, a 40 per cent drop on around 25 sales over the same period in 2007.

The reluctance of many banks to offer people mortgages they can afford is behind the “stagnant” market, RICS said, although it expects sales to pick up over the summer months.

Lenders have been tightening borrowing criteria amid the weak economy and the eurozone crisis, making it harder for people to take out a mortgage, with several putting up their rates.

The latest figures from the RICS UK Housing Market survey showed that the Scottish housing market continued to see falling prices, demand and volumes throughout May.

Anecdotal evidence from Scottish surveyors suggests re-entering a recession has hit confidence.

Sarah Speirs, director, RICS Scotland, said: “The economic instability has continued to undermine consumer confidence, and the reluctance of many banks to offer affordable mortgages has created a stagnant market.”