House sales hit four-year low

NIC CICUTTI

The fragility of the housing market recovery was underlined by figures yesterday showing that the number of home purchases in England and Wales during December were at their lowest level for four years.

Optimism on the loans front is also set to be dashed later today with figures from the Building Societies Association likely to show the net amount lent last month fell substantially below November's total of pounds 865m. The net lending total of about pounds 500m will, however, still be substantially up on the previous figure of pounds 295m, which was recorded in October.

Housing transactions recorded by the Central Statistical Office for December were 89,000, down about 14 per cent from the figure of 104,000 for the December 1994.

The new sales low comes despite figures from Halifax Building Society showing that house prices have risen every month in the last five. Since September mortgage lenders have reduced the cost of home loans three times in a bid to kick-start the market.

The crisis facing the housing market last year was underlined by the fact that transactions in England and Wales, at 1.13 million, were the lowest since 1991.

A BSA spokeswoman said: "One cannot argue that these are good figures. They do imply that December was not a good month. We seem to be going two steps forward and one step back.

"We expect mortgage lending figures for December to be gloomy, but the month is not traditionally one in which a lot of sales activity takes place.

"It could be argued that the very fact that transactions have remained stable compared to November is in itself a measure of an element of stability now in the market."

The quarterly figures, issued by the Central Office of Statistics, show an overall decline in transactions in the final quarter of last year, down to a seasonally-adjusted figure of 269,000, itself the lowest level since the first three months of 1993.

Rob Thomas, building society analyst at UBS, the Swiss banking group, said: "Property transaction figures lag behind what is happening in the market.

"In this case, they probably reflect what was happening in October or earlier. One can deduce that there has not yet been that much of a pick- up.

"In fact, we are down to the levels not seen since the worst point in 1992 or 1993. It is difficult to see how the market can remain at these exceptionally low levels."

Ian Shepherdson, UK economist at HSBC Greenwell, disputed the significance of the CSO's statistics: "The fact is that what we are seeing at present is the working through of the worst point in the market several months ago.

"The real figures, which show the level of commitments by lenders, show a different picture altogether. They indicate that the market is moving back upward, though that will probably not be reflected in these figures until the Spring.

"In any case, they are skewed by the fact that Cheltenham & Gloucester was a building society until last August, so there is no meaningful way to compare them year-on-year."