The slump in the UK property market continued in August, with some estate agents selling fewer than one home per week in the past three months.

The Royal Institution of Chartered Surveyors (Rics) said sales were at their lowest level since its monthly survey started in 1978.

It said the fall in prices slowed, for the fourth month in a row, but they were still much lower than a year ago.

Rics said the continued shortage of mortgage funds was “stifling” buyers.

Mortgage famine

“A lack of mortgage liquidity is the key issue which is keeping the housing market from showing any real sign of recovery,” said Rics spokesperson Jeremy Leaf.

“While money is scarce, many will continue to be denied the next step on the property ladder.

“The Government’s stamp duty policy will not be enough kick start transactions,” he warned.

Meanwhile, the head of the Nationwide Building Society told the BBC that he expected house prices to fall by 25% from their peak last autumn.

Graham Beale also said he does not expect to see signs of recovery in the housing market until 2010.

The weakness in the housing market is being exacerbated by the sharp slowdown in the UK economy.

Unemployment is rising, growth is falling, and retail sales are weak – with the British Retail Consortium reporting that sales have been flat throughout the summer.

The past 12 months have seen an unprecedented collapse in home sales and prices since the property market, both here and in the US, was struck by the credit crunch in the financial markets.

Ripples from the crisis have spread throughout the world, with house prices falling sharply in many other European countries.

According to Rics, the average estate agent in the UK sold just 12.7 properties in the three months to the end of August.

That meant sales were running at levels 47% lower than in August last year.

And with the market normally quiet in August anyway, estate agents have seen interest even from predatory buyers “stagnate”.

The only glimmer of optimism in the Rics report was that the number of estate agents reporting a rise in new instructions was only slightly outnumbered by those reporting a fall.

However the number of new enquiries from potential new buyers fell again, and at a faster pace than in July, suggesting that the market may stagnate further in coming months.

“Falls in enquiries took place across all regions in England and Wales,” Rics said.

Cheaper mortgages?

The cost of borrowing has in fact been coming down in the past couple of months for some new borrowers, especially those who can afford to put down a deposit of at least 25%.

Banks and other lenders have found it cheaper than before to raise mortgage funds on the wholesale financial markets and have been passing this on to their most favoured customers.

Of the 12 largest mortgage lenders in the UK, 10 have cut the cost of their two or three-year fixed rate deals in the past two weeks.

The latest example came from HSBC, which yesterday cut the cost of all its fixed rate mortgages by between 0.46% and 0.72%.

News reported by The BBC

House prices in England and Wales were unchanged in May and up 1.8% over the year, the Land Registry says.

But it said that sales volumes during March were half of the number of March 2007, at 53,080.

The figures, which are based on completed property sales, come after sharp falls in house prices were reported by the UK’s major lenders.

The Registry said annual price growth fell for the ninth month running. The average cost of a home was £183,266.

Price changes

The data shows that London has the biggest year-on-year growth in property prices – up 6.9%.

There were also rises in prices in the East Midlands, the East, Yorkshire and Humber, the South East and the North West.

But average prices fell over the last 12 months in the North East, South West, Wales and the West Midlands.

At a more local level, Monmouthshire saw the highest annual price growth in May – at 6.9%, whereas in Ceredigion prices fell the most, by 7%.

Following the trend?

The figures painted a far more rosy picture for homeowners than lenders’ data for the whole of the UK during the same month.

A series of house price reports will be published in the coming days

The Land Registry figures are based on completed sales across all lenders, unlike Halifax and Nationwide surveys which are based on an earlier stage in the buying process – when the price is agreed after a survey by their mortgage customers.

According to Halifax, UK house prices dropped by 2.4% in May, which pushed prices 3.8% lower than a year before.

Halifax, which is Britain’s biggest mortgage lender, has since predicted that UK house prices would drop by 9% this year, a more severe fall than its previous forecast.

The Nationwide building society reported a 2.5% fall in house prices during May.

The surveys, and other research, all show a significant fall in the volume of house sales.

The Land Registry said there were an average of 61,950 transactions per month from December to March, down from the same period a year earlier when the average stood at 100,693.

The number of properties sold in England and Wales has dropped by about half from March 2007 to March 2008 across all price ranges.

This includes the £1m-plus bracket, with 646 luxury homes sold in March 2007, but 357 sold in March 2008.

Transactions have collapsed in the wake of the international credit crunch, as banks and other lenders found it very difficult to raise mortgage funds on the financial markets.

Earlier this week HM Revenue and Customs said the number of UK property sales had fallen by 32% this year.

News reported by BBC