March 25, 2008 / 12:04 AM / 12 years ago

House-buyer numbers drop to record low

LONDON (Reuters) - The global credit crunch is hitting the housing market, pushing house-buyer numbers to a record low, figures showed on Tuesday.

"For sale" signs are nailed to trees outside flats in Manchester, England January 29, 2008. REUTERS/Phil Noble

The number of house-buyers on estate agents’ books dropped 12 percent last month — to 243 per agent from 276 in January — according to the National Association of Estate Agents (NAEA).

That was the lowest recorded in its monthly housing market survey to date.

At the same time the gap between asking prices and what properties actually sold for continued to widen to stand at 4.5 percent.

The NAEA said a “plethora” of external pressures, including the credit crunch and squeeze on mortgage approvals, was making buyers wary and causing the cogs in the property market to slow.

Lenders have been reassessing risk and tightening their criteria amid turbulent market conditions that have pushed up the cost of borrowing.

“Invariably, the global credit crunch, especially the U.S. situation, has had a knock on effect, which coupled with consumer inflation, is placing continuing pressure onto the property market,” said president Stewart Lilly.

“We continue to call on the Bank of England to lower interest rates to help prevent the economy slumping and to help bring back a renewed sense of optimism for the consumers.”

The Monetary Policy Committee has cut the base rate twice in recent months to 5.25 percent, but some lenders have failed to pass the reductions on and fears are growing that more and more consumers will encounter serious debt problems.

The number of homes on the market during February declined almost 11 percent to an average of 74 per estate agent as potential sellers awaited more favourable market conditions.

Each agent made an average of eight sales during the month, the same as the previous month, but down from 13 a year ago.

The NAEA survey came a day after the country’s largest property portal said sellers need a “reality check” when pricing their homes for sale, as unsold stock reaches record proportions.

The Web site — which advertises 90 percent of all homes for sale via estate agents across the UK, measuring an average 35,000 properties coming to the market per week — said the property market was in danger of stagnating, as house price growth nears zero percent.

Editing by Jeremy Lovell

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