FT: Data show lowest home sales in 30 years

Data show lowest home sales in 30 years By Norma Cohen
Financial Times Published: February 10 2009 00:02
Surveyors sold fewer homes per agency in the three months to January than at any time in the past 30 years, according to the latest monthly survey from the Royal Institution of Chartered Surveyors.
The average number of transactions, at 9.9 for each office over the past three months, is down only marginally from 10 in December. Nevertheless, the profession has noted such a large rise in inquiries from potential buyers that it is decidedly optimistic. Those surveyors reporting a rise in new-buyer inquiries rose last month to 16 per cent more than those reporting a fall. That compares with 37 per cent more surveyors reporting a drop in inquiries in January last year. In London, the turnround was even more dramatic, with 38 per cent more surveyors saying the number of inquiries rose, up from 1 per cent more saying they were falling back in July 2008.
Anecdotal comments from London agents in the survey suggest that the weak pound is spurring interest from continental buyers who would be paying in euros.
The survey found 10 per cent more surveyors expected sales to rise than expected them to fall. New-buyer inquiries increased in January for a third consecutive month and at the same pace as in December.
Data from Rics show new-buyer inquiries stopped falling around the middle of last year and began to rise towards the end of 2008, suggesting that a sharp decline in prices might be bringing buyers back into the market.
The apparent disconnection between new-buyer inquiries and actual sales has puzzled some economists, who have seen inquiries as a leading indicator of demand. Economists at Nationwide, unveiling their most recent house price index, suggested that lack of financing might be delaying buyer interest being translated into sales.
Rics, which noted that the outlook for sales remained below the survey?s long-run average, believed the interest from potential buyers was partly due to sharp cuts in interest rates and falling house prices.
Meanwhile, the average inventory of stock on surveyors? books fell to 75.4 from 77.9 ? 10.4 per cent below their levels of a year ago ? the first year-on-year decline since October 2007.
The sales-to-stock ratio ? a lead indicator of future prices ? rose slightly in January to 13.1 from 12.8 in December but remains near the record low seen in December 1992.
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