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Housing activity rises 9.5%, but eurozone crisis looms

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  • 14/10/2011
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Housing activity rises 9.5%, but eurozone crisis looms
Housing transactions rose 9.5% in September, as property prices fell 2.3% year-on-year, according to LSL Property Services and Acadametrics.

However, they said that the encouraging signs seen over the last two months have already been hit by the eurozone crisis and any further recovery will depend on the success of governmental intervention.

Their report showed activity in the housing market bounced back in August and September after a weak first half of the year, with cheaper properties and affordable mortgages boosting consumer confidence.

While transactions between February and July 2011 were lower than the same period of 2010, August and September have both seen activity increase on the same months of last year.

Indeed, Acadametrics estimates that the last two months have seen housing transactions increase to their highest level since October 2009.

It found that transactions in August and September were running at 66% and 73% respectively of the long-term average, compared to 62% and 64% for the same months of 2010.

Transactions for the last two months were also up from between 54% and 62% over January to July.

Acadametrics estimated that the number of properties sold totalled around 66,500 for both August and September and highlighted that September transactions are normally expected to fall 9.5% on levels seen in August.

Meanwhile, house prices dropped 0.3% in September compared to August, to an average of £218,650 across England and Wales, and are expected to finish 2.5% down over the year in line with Treasury forecasts.

David Brown, commercial director of LSL Property Services, said the drop in house prices should not leave homeowners entirely gloomy: “Buyer activity is picking up as transactions have been much higher than we would normally expect at this time of the year.

“This is important because it shows the market is not on a course for terminal decline.”

However, Dr Peter Williams, chairman of Acadametrics, added: “Until August/early September, the trends were beginning to suggest the market would see continuous improvement.

“However, with the unfolding of the eurozone crisis and its impact on global markets, a rapid deterioration has taken place over the last three weeks.

“This might drive the housing market down, taking house prices with it; much turns on the success of the interventions now put in place and the further action likely to be taken in the next month or so.”

Williams continued: “It must be said that we can only surmise what might happen to prices and transactions, based upon the conditions pertaining at the time.

“These are now changing such that conditions that underpinned any of the more positive trends reported in this report are already less in evidence today.”

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