The tentative recovery of the UK housing market was shaken once again this week as a survey showed that the summer holiday season has reduced demand and therefore prices.
The website Rightmove has released figures which show that new listings of property have outnumbered mortgage approvals by a ratio of 5:2. With many potential buyers on holiday, the over-supply has led to asking prices falling in the month to 7 August.
Last month the average asking price in the UK was £232,241, this was down from £236,332 a month earlier.
Analysts believe that the market needs an external ‘boost’ to get housing prices rising again but since the stock shortages of last year are now gone and mortgages still lacking widespread availability this boost is not expected within 2010.
The mortgage problem is still the one of most concern to buyers and there has been some good news. The Council of Mortgage Lenders (CML) says that mortgage lending to home buyers picked up again in June.
There were 52,000 new loans granted to home buyers, 19% more than in May and up 14% on the same month a year ago. However, the CML still said it was still cautious about the prospects for the coming months.
The number of property sales has been rising this year, from 50,000 in January to 86,000 in June, according to recent data from HM Revenue & Customs. However, this has still left lending and sales at levels roughly half those recorded in the years running up to the onset of the credit crunch in 2007.
One continued side effect of the banking crisis is that mortgage lending is still being severely rationed. After a slight relaxation by lenders in April and May, first-time buyers in June were back to having to put down deposits averaging 24% of the value of the homes they are buying.
However, first-timers are managing to get back into the market. They took 28% more mortgages in the first half of this year than they did in the first six months of 2009.
The UK’s property market now appears to have stabilised around its recent low levels, according to the governor of the Bank of England, Mervyn King. The Bank’s latest Inflation Report points out that lenders have been rationing “higher-risk” loans and charging more for them.
The word being used most about general economic recovery as well as that in the housing market is ‘choppy’. This means that while the overall picture is one of gradual improvement there will still be small disappointments and problems along the way.
