Tough times ahead as property market dips on all fronts

News Category: Industry News

An arid August looks set to lie ahead for agents, with the latest data – from a variety of sources – showing prices, transaction levels and mortgage lending all heading south.

Mortgage lending fell in June, the Bank of England reported yesterday. The number of loan approvals for house purchase stood at 47,643, 4% lower than May’s figure of 49,461 and below the previous six-month average of 50,036.

The gross lending figure of £12.9bn, was lower than the £13.1bn forecast by the mortgage industry itself, whilst the number of approvals for house purchase was 6% lower than in June last year.

Also yesterday, Nationwide reported a house price fall of 0.5% this month. It is the first time since February that the lender has reported a dip.

It said buyers are in short supply and that average house prices are now £169,347.

The new data ties in with the latest Land Registry report covering June.

According to this, house prices grew just 0.1% in June to reach an average of £166,072.

It means house prices are now 8.4% higher than last June and are at about the same level as in the summer of 2006.

Sales volumes averaged 44,114 per month from January to April – a marked improvement on the average of 32,041 for the same period in 2009, but still a very long way off the highs of 2006. In that year, monthly mortgages averaged around 120,000.

Nor is it clear that transaction levels will pick up this year.

House sale boards company Agency Express reported that the number of For Sale boards converting to Sold dropped 2.9% in July compared with June, when there was also a fall. More worrying, the level of house sales by this measure was down 3.9% on July last year.

Andrew Montlake, director of independent mortgage broker Coreco, said of the latest lending figures: “Banks are still not lending in sufficient quantities, which explains the frustration felt by many would-be borrowers.

“First-time buyers have every right to feel discriminated against, as while mortgage lending has become more profitable for many lenders, it is too often targeted at those customers who are already well catered for. Lenders are continuing to walk the easy path.

“Much more needs to be done by lenders in order to revitalise the mortgage market.”

Adam Challis, head of research at Hamptons, said asking prices had fallen by as much as 5% across the south of the country.

He said: “Tighter controls over the mortgage market are likely to remain a factor that will constrain demand for some time. As a result, we anticipate a house price adjustment through the second half of the year, reversing the gains since January. We expect house prices to end the year down by 1–2%.”


Article courtesy of Estate Agent Today Sign up for EAT newsletter