HOUSE sales have slumped by almost 40 per cent in parts of South Wales over the past year as the credit crunch continues to bite, new figures have revealed.

Figures published by the Land Registry show the biggest fall in the number of sales being reported by estate agents was in Neath Port Talbot, with Carmarthenshire and Swansea close behind.

In May 2007, 204 sales went through estate agents' books in Neath Port Talbot, compared to just 126 in May this year — a drop of 38.2 per cent.

Carmarthenshire saw the next biggest fall with the number of sales dipping from 278 in May 2007 to just 180 in May 2008 — a drop of 35.3 per cent.

In Swansea the number of house sales fell from 432 in May 2007 to 289 in May 2008 — a drop of 33.1 per cent.

It is thought the number of sales going through estate agents' books is the lowest for 30 years, according to a study published last month by the Royal Institution of Chartered Surveyors.

The news comes as the Government announced plans to give homebuyers a stamp duty holiday as part of a rescue package to breathe life back into the ailing housing market.

Last night Chancellor Alistair Darling announced that homes worth £175,000 or less will be exempted from stamp duty for the next year.

The change, which comes into effect today, raises the threshold on which one per cent stamp duty is paid from its current level of £125,000.

The move will be welcomed across South Wales where the average house price varies from £108,217 in Neath Port Talbot to £128,505 in Swansea and £133,302 in Carmarthenshire.

It will mean the average home buyer in the area will be able to save up to £1,750 when they purchase a property, but relates only to buildings for residential use.

The Treasury estimates that the one-year stamp duty freeze will cost the Government £600 million — suggesting that it expects about half a million home-buyers to benefit from the change.

The average price of a home in the UK was just under £165,000 in August, according to the Nationwide Monthly House Price Index.

Welsh Secretary Paul Murphy described the move as a sensible measure that will help many first-time buyers in Wales.

He said: "The stamp duty holiday, announced by the Chancellor, has come at a crucial time for the housing market.

"Halting this stamp duty for the next year will bring some stability to the housing market."

Mr Murphy also highlighted the support already available to homeowners in Wales through the Assembly's Mortgage Rescue Scheme. He added: "In June the Assembly announced that an extra £5 million would be provided for the Mortgage Rescue Scheme in Wales.

"We are sensitive to the financial concerns some people have and we remain committed to maintaining a stable economic environment."