Housing round up: prices fall although mortgage lending rises

Posted on October 15th, 2011 | Categories - News

Housing & mortgage round upIn this week’s housing round up we look at the latest survey showing a fall in property prices, and reports that mortgage lending is on the rise.

House prices fall

The latest House Price Index from LSL Property Services/Acadametrics has shown that house prices fell by 0.3% in September, reducing the average house value by £594.

In the year to September the survey shows that house prices fell by an average of 2.3% or £5,240, although the figures show that prices have risen 9.2% since their low point in April 2009.

LSL Property Services/Acadametrics believe that the average house price in the UK is now £218,650, significantly more than surveys from the Halifax and Nationwide who put the average price at between £160,000 and £170,000.

Dr Peter Williams, chairman of Acadametrics, said: “This monthly fall is small and, when combined with the positive movements in July and August during the quarter, means that the housing market is probably best described as ‘stationary’.”

He continued: “It is possible that the housing market will continue to remain more or less stationary over the next three months, giving an out-turn of approximately -2.5pc for the year as a whole – roughly in line with a number of forecasts published by HM Treasury in August.”

Mortgage lending

Mortgage lending, for both house purchases and remortgages rose in August according to figures released by the Council for Mortgage Lenders (CML).

34,100 remortgages were taken out in August, some 30% higher than the same time last year.

The number of mortgages for house purchases also rose in August to 52,000, up from 48,700 in July and by about 1,000 on the same time last year. Encouragingly the number of loans to first time buyers rose by 5% in August.

Paul SmeePaul Smee (right), director general of the CML, said: “Even though it is impossible to ignore the knocks to confidence emanating from the euro zone, August lending showed welcome signs of life. With those moving house experiencing a record low in the proportion of their income needed to pay their mortgage interest, it is clear that the low rate environment is a benefit to those with mortgages, even against the backdrop of the gloom in the wider economy.”

Experts warned though that too much should not be read into these figures as those for August 2010 were particularly poor.

Other experts said that the August figures whilst modest compared to the best months of the housing boom were nevertheless positive in the context of recent poor months for the housing market.

The CML’s data also showed that the average loan to value, where the mortgage amount is compared to the purchase price or value of the property has risen to 80% from 77% in August 2010, giving hope that mortgage lending criteria may be easing slightly.

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