Press Release Summary = Producing an accurate synopsis of the UK housing market and predicting the future has never been easy. During the last year lenders have consistently said the slowdown in house price inflation was coming, yet still it has remained high.
Press Release Body = Producing an accurate synopsis of the UK housing market and predicting the future has never been easy. During the last year lenders have consistently said the slowdown in house price inflation was coming, yet still it has remained high.
Recent figures have been more ambiguous. Nationwide\'s figures for July showed house price inflation for the month down at 0.1 per cent, the lowest for 15 months, yet days later figures from the Department for Communities and Local Government said house prices had risen 12.1 per cent in the year to June 2007, up from 10.8 per cent in May, prompting Howard Archer, chief economist at Global Insight, to say: \"the housing market is proving resilient to higher interest rates\".
Trends have continued to be ambiguous, with one notable factor being an increased regional variation as some parts of the country have seen prices fall while others, notably London and Scotland, have been ahead of the average. Towns in particular locations such as the seaside, have seen notable rises. This has been especially true of seaside towns in Scotland.
Mortgage lending has also shown divergent trends. For example, demand from first-time buyers has been falling as interest rates rise, with the Royal Institution of Chartered Surveyors producing figures this month indicating that first-time buyer demand is at its lowest since August 2004, while the Council of Mortgage Lenders (CML) figures produced the lowest tally of first-time buyers since June 2004. Yet only this week the CML stated that overall mortgage figures for July were at their highest ever for that month, at £34.4 million.
Thus the picture has consistently appeared unclear and variable, the broad picture being less evident than the situation affecting particular areas or particular demographic groups. But the evidence may now be solidifying that a genuine slowdown is finally under way in the housing market.
Firstly, those CML July mortgage figures, while 13.4 per cent up on July 2006, were still one per cent down on June. That alone may not be much indication of a decline, but fresh figures from the National Association of Estate Agents today add to the evidence of a slowdown. Its figures show that the number of house-hunters per estate agent declined from 322 in June to 314 in July, a 2.5 per cent drop and the fifth successive fall. At the other end of the process, the average number of sales per agent in July was ten, the lowest this year and lower than any month in the last 12 except for December, a traditionally quiet month because of Christmas.
The value of mortgages has also fallen, according to price comparison website Moneyextra, which stated that the worth of the deals its customers were taking out fell to £151,488.09 in July, down from the highest ever figure recorded by the site, £166, 732.43, in May. It also noted first-time buyer mortgages, at £132,699, were at their lowest since January 2006.
So it appears mortgages are going down, both in number and in value, but perhaps the strongest evidence that the boom is over came this week from London, for so long the hotspot while other places appeared to be cooling. The capital has seen asking prices fall during August by 0.1 per cent, according to the latest figures from property website Rightmove. The site\'s commercial director Miles Shipside certainly believed this was highly significant, saying: \"It finally paves the way for a return to a sustainable market without the need for further interest rate rises, though many buyers will still face affordability problems.\"
With Nationwide tipping house price inflation to drop to as low as three per cent in the next year, perhaps this really is the end of the inflationary surge in the property market.
2022
