New surveys confirm depressed housing & mortgage markets

Financial News

Recent surveys have shown that house prices, sales volumes and mortgage approvals are under continued pressure.

House Prices

The government’s own house price survey, published by the Department for Communities and Local Government (DCLG) has found that house prices fell in the UK by 1.1% in the month of April. The annual fall was measured at 0.3%.

The DCLG survey echoes the findings of other house price reports from Halifax, Nationwide and the Land Registry.

The regional picture is however more complex with house prices in England actually remaining unchanged, with falls of 15.2%, 1.4% and 1.2% in Northern Ireland, Wales and Scotland respectively. House prices in London, which are often seen as a national barometer of actually rose by 3.6% over the past year.


The Royal Institution of Chartered Surveyors (RICS) has reported that the depressed housing market is a result of general economic instability and also continued tight mortgage criteria from banks and building societies.

Despite the Council of Mortgage Lenders confirming a rising in borrowing during the month of April it believes it unlikely lending will rise further during the rest of the year. New loans to homebuyers rose by 8% in April with 40,900 new loans issued; this was still 2% down on last year.

Michael Coogan, the CML’s director general, said: “The market continues on a stable footing and the increase in house purchase lending is a good sign that the stability will continue throughout 2011.”

“However, the economic outlook, coupled with Bank of England subdued approvals data for April, suggests a muted summer for mortgage completions so we do not expect further increases in lending over the coming months,” he added.

Whilst speculation continues about when interest rates will rise people are likely to be nervous about increasing the size of their mortgage, which has an obvious knock on effect to the housing market.

First Time Buyers

Lenders requirement for larger deposits to obtain a mortgage have seen many first time buyers squeezed out of the housing market over the past few years. April saw some very slight relief with the average deposit required to obtain a mortgage falling from 21% to 20%.

Such a slight fall in the size of deposit required to obtain a mortgage is unlikely though to have a material effect on the ability of a first time buyer to enter the housing market.

Jonathan Moore, of flat sharing website easyroommate: “(The) CML’s latest figures cannot paper over the fact that the mortgage market remains stagnant, and it is first-time buyers who are worst affected.”

“Despite the miniscule increase in the average loan-to-value, would-be buyers are being forced to stump up an average deposit of nearly £26,000 at a time when living costs are spiralling and rents are at a record high,” he added.

Estate Agents

The RICS survey found that the number of enquiries had fallen slightly in May, but that the number of homes being put up for sale had increased.

The survey found that 28% of estate agents had seen small falls in house prices, of less than 2%, over the past three months.

“Buyer interest in purchasing property remains flat across much of the country and there is little sign of this changing any time soon,” said RICS housing spokesman Ian Perry.

“Uncertainty over the economic outlook remains as important as the availability of mortgage finance in depressing demand.”