Mixed signals for the housing market

Posted on September 13th, 2011 | Categories - News

Mixed signals for the housing marketDespite mortgage approvals reaching a 15 month high new data points to a sluggish housing market with estate agents concerned about house prices falling over the coming months.

A new survey by the Royal Institute of Chartered Surveyors (Rics) found that estate agents sold on average just 14 properties each in the three months to August. This is the lowest total for two years and according to Rics was mainly due to lack of mortgage lending and a sluggish economy.

The report went on to say that more surveyors reported price falls in August rather than rises and a growing number expected prices to drop over the next three months.

Alan Collect, a spokesman for Rics said: “The risk is that the worsening economic picture will gradually begin to have a more material impact on sentiment and discourage potential house purchasers, even where mortgage finance is available.”

Rics said that prices continue to rise in London, despite dears that they might start to fall in the capital. The survey also said that prices had fallen by the largest amounts in East Anglia and the West Midlands.

Mixed signals

There is no shortage of surveys and reports available for the housing market. Not only do we have the information produced by Rics but also the other four main house price surveys by Halifax, Nationwide, Land Registry and the government itself. In addition HMRC report on the number of transactions taking place and e.Surv report each month on the number of mortgage approvals.

The data produced by these surveys can be interpreted in many different ways. For example e.Surv reported last week that mortgage approvals had hit a 15 month high, but at the same time figures from the Council of Mortgage Lenders (CML) showed that mortgages specifically for homebuyers, whilst higher in July were still down on a year ago.

The message? That the housing and mortgage markets are still in a state of flux.

Things are clearly still a long way off the heights of the housing boom of 2007, people with small deposits are struggling to find a competitive mortgage deal, with first time buyers still finding it hardest to get a mortgage, whilst lending criteria remains generally tight and volumes of transactions are down.

Any sign of good news, whether it be the recent report by e.Surv or a new lender offering a 100% mortgage is jumped upon as a sign of good news and recovery. The truth though would seem to be complex with no clear pattern likely to emerge for some time to come.

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