Posted on July 21st, 2012 | Categories - News
A week without a house price survey is indeed a rare event, but that’s exactly what we have this week, absolutely no new house price surveys to report whatsoever!
That doesn’t mean a lack of mortgage and housing stories though, even if they are all pointing to a stagnant housing market. The IMF has said property prices will continue to fall, mortgage lending has fallen back and homebuyers are having to reduce asking prices to tempt would-be buyers.
IMF predicts further falls in house prices
The International Monetary Fund (IMF) has warned that the UK can expect an “extended housing market slump” with house prices falling a further 10% – 15% relative to salary levels.
The IMFs comments on the UK housing market came as part of a wide ranging report into the state of the UK economy, in which it urged the coalition government to consider changing course if the economic situation does not improve by early 2013.
Mortgage lending falls back
Last week we reported on positive mortgage lending figures for May and asked whether this was the start of an upward trend or a blip in a generally stagnant market, this week might give us a clue to the answer.
Figures released by the Council of Mortgage Lenders (CML) show that mortgage lending fell back by 5% in June compared to May, but also, and possibly more worryingly, compared to this time last year.
Bob Pannell, Chief Economist at the CML, said: “Mortgage lending has experienced something of a see-saw pattern over recent months, largely reflecting the short-term spike and subsequent trough in house purchase activity associated with the ending of the stamp duty concession for first-time buyers in late March.”
He continued: “Weaker mortgage lending in June points to a more subdued tone for the housing market in line with that for the wider economy.”
However, the CML’s figures do show that lending so far in 2012 was up 7% compared to the same period in 2011, giving some hope that the housing market may be showing some signs of recovery. Other experts though think lending will drop over the course of the second half of the year with the figures for the first half artificially boosted by the Stamp Duty holiday for first time buyers, with the Olympics and ongoing Eurozone crisis acting as a drag on mortgage lending over the next few months.
Sellers reduce asking prices
Right Move has said that the average asking price for properties fell in July for the first time since January.
The estate agent said that sellers cut 1.7%, equivalent to £4,138, off the asking price for the average property.
It seems that the wet weather has put people off viewing potential new properties, causing sellers to have to reduce their asking prices in the hope of tempting would-be buyers across the threshold. Right Move also said that the Olympics would cause a “distraction”, which may cause some home buyers to delay viewings.
However, there also seems to be a general trend in sellers or estate agents over estimating the value of properties. Three major house price surveys, from the Land Registry, Nationwide and Halifax all regularly put the average house price in the UK at approximately £160,000, however according to Right Move the average asking price of a new property coming to the market is £242,100.
Right Move also said that the amount of unsold homes remained high, at an average of 75 per branch.
Miles Shipside, Director at Right Move, said: “The fact that we have not seen major price falls in the UK and that many areas are not awash with ‘For Sale’ boards may lead some sellers to be over-optimistic with their pricing.”
He continued: “New seller numbers may be down some 30% on the period prior to credit-crunch, but the numbers achieving a successful sale are down by half and average unsold stock levels are creeping up.”
“Sellers need to adjust, as this new world is the new norm,”
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