Housing market still flat

Posted on July 13th, 2011 | Categories - House Prices, Mortgages

Two new surveys have shown that the housing market remains flat with house prices falling in some areas, a third survey has shown that mortgage lending remains stagnant.

Rics figures

The latest housing survey from the Royal Institute of Chartered Surveyors (Rics), which is made up from data submitted by its’ members, has shown house prices fell slightly in June with the number of sales rising only slightly.

The survey also found that the number of enquiries from house buyers was unchanged, although the number of properties put on the market for sale fell slightly.

Alan Collett of Rics said: “With continued uncertainty over the jobs market and the economy, this subdued picture is set to continue.”

“London, however, remains a market apart with both sales and prices showing a greater degree of resilience.”

Government figures

The results of the government’s own survey by the Department for Communities and Local Government (DCLG) showed that in June house prices fell by 0.5% with a total fall of 1.6% over the past year.

The DCLG survey agreed with the figures from Rics saying only house prices in London escaped a fall.

“Average prices decreased during the year in England (-1.3%) and also decreased in Wales (-6.1%), Scotland (-2.5%) and Northern Ireland (-13.2%),” the DCLG reported

The survey found that the average house price in the UK was now £203,528.

Mortgage Lending

Figures released on Monday by the Council of Mortgage Lenders (CML) echo this week’s other surveys and point to a stagnant mortgage market.

The CML report showed that in May the number of new mortgages for home buyers had risen by 1.7% from April to 41,500, but this is still 5% lower than the same time last year.

Of the total loans made to homebuyers in May 15,900 were to first time buyers, up 0.6% on April, but still down on the same month last year.

The average deposit put down by a home buyer is currently 20% reflecting the caution with which many lenders are approaching the housing market at the moment. The average size of deposit required by many lenders to secure their most competitive mortgage deals is likely to be one reason for the sluggish performance of the housing market. Other reasons include fears over job security, concerns over when interest rates will increase and rising inflation, particularly with regard to energy costs.

According to the CML the situation is unlikely to change in the near future, Michael Coogan, director general of the CML: “There is no evidence of any drastic changes on the horizon or any significant shifts in direction for the mortgage market.”

He continued, “These stable conditions are expected to continue for the rest of the year.”