Housing & mortgage round up: House prices creep up, house sales rise but mortgage approvals slump


Housing & mortgage round upWe knew the absence of house price surveys wouldn’t last long and this week sees the Land Registry release their latest house price data, whilst we also get figures showing mortgage approvals have slumped, despite a rise in the number of house sales during the first half of the year.

Land Registry: House prices creep up in May

The latest figures from the Land Registry show that house prices rose by just 0.1% in June compared to May.

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The data also shows a rise in house prices of 0.9% over the past year, with the average home in England and Wales now worth £161,777.

As usual the headline figures mask significant regional variations with Wales experiencing the largest monthly rise in June at 2.5%, whilst three regions, the East Midlands, Yorkshire & Humber and the South West all saw small falls. The East Midlands and Yorkshire & Humber are the only two regions to see negative growth over the past 12 months.

The Land Registry figures are generally accepted to be the most accurate of all the house prices surveys, because they are based on all transactions taking place in England and Wales.

Mortgage approvals slip to 15 year low

New figures from the British Bankers Association (BBA) show that the number of mortgage approvals in June slipped to a 15 year low.

The BBA figures show that 51,610 mortgages were approved in June, the lowest number since September 1997 when their records began.

A number of factors, including the generally sluggish housing market, tight mortgage lending criteria, plus the unseasonably wet weather and Jubilee celebrations seem to have combined to create a poor month for mortgage approvals.

Many housing experts are now predicting that low demand for mortgages will start to feed through to house prices, potentially pushing them lower over the coming months.

David Dooks, Statistics Director at the BBA, said: “Public holidays and wet weather put a damper on mortgage approvals in June and demand for unsecured borrowing was also low.”

Dooks continued: “Paying off loans or overdrafts and building up deposits is the current consumer ambition.”

Dooks’ comments were confirmed by the BBA figures, which show personal savings rising by 5.1% over the year to June, driven in part by strong growth in Cash ISAs (Individual Savings Accounts).

Over the same period unsecured lending, which includes credit cards and personal loans, contracted by 2.3%, confirming that as a nation we are spending and borrowing less, whilst saving more.

House sales up significantly compared to 2011

Despite concerns about the stagnant housing market, figures from HRMC show a potentially brighter picture than this time last year.
According to HMRC, the number of completed property sales for the first half of 2012 increased by 11% on the same time last year, with 431,000 properties sold, a rise of 43,000 on 2011.

The increase is partly down to the government’s Stamp Duty holiday for first time buyers, which came to an end in March. With low mortgage approvals last month, and wider concerns about the economy, some experts have suggested that sales could fall away during the second half of the year leaving the overall picture in 2012 broadly similar to 2011.

Rents rise for third month in a row

Figures from LSL show that the cost of renting has risen for the third month in a row, with prices rising to record levels in London, partly due to short term demand fueled by the Olympics.

The average tenant in England and Wales is now paying rent of £718 per month, a rise of 0.9% on this time last month, and just £2 per month off the record high seen in October 2011.

The average monthly rent in London however is considerably higher at £1,047.

David Newnes of LSL said: “The sheer weight of tenant demand continues to push up rents across the country. Lending criteria remains tight and the number of mortgages given to first-time buyers, especially those without substantial deposits, is still a long way from the level seen before the credit crunch.”
Newnes continued: “With higher rents and the growing cost of living eroding how much tenants can save towards the large deposits required to buy, it’s no surprise to see the private rented sector swelling by 262,000 households a year.”

High levels of rent seem to be having a knock on effect on the housing market; with many first time buyers finding it hard to save a large enough deposit to secure a mortgage.

Our mortgage adviser, Linda Wood, is here to help you. If you would like advice on your options or you are affected by any of the stories in this week’s housing round up please call Linda today on 0115 933 8433, alternatively enquire online or email linda.wood@investmentsense.co.uk

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