Property transactions 'were healthier even in the 90s'

Housing transactions for 2008 are set to drop 60 per cent lower than the annual rate seen during the UK's last recession in the 1990s, it has been suggested.

Housing transactions for 2008 are set to drop 60 per cent lower than the annual rate seen during the UK's last recession in the 1990s, it has been suggested.

Following Bank of England figures that show just 36,000 mortgages were approved by banks during June, it has been suggested that house transactions for the year will only total 400,000, compared to one million sold during even the worst year of the 1990s crash.

Mike Ratcliffe, chief executive of constructionfinance company Wolsey, which conducted the research, said: "Transaction levels have now dropped to dangerously low levels that have not been seen in several lifetimes.

"The housing industry cannot sustain this level of trade. Housebuilders are on their knees. If there isn't an improvement soon many will fold, as their cashflows will not be able to meet overheads and interest costs."

However, with the Bank of England making it clear that its priority is inflation, it appears that interest rates - and loan availability - will not drop in the near future.

Despite some analysts predicting interest rates may well drop once during the remainder of 2008, the likelihood of a serious turnaround rests on high street banks' willingness to provide more mortgages.