Sluggish housing market flatlines for another month

by Property118.com News Team

9:24 AM, 26th May 2011
About 9 years ago

Sluggish housing market flatlines for another month

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Sluggish housing market flatlines for another month

The property market looks to have settled as house sales and mortgage lending seem to follow trends set over the past few months.

Estate agents sold an average eight homes a branch in April – the same as February and March – says the National Association of Estate Agents (NAEA).

A lack of mortgage funding is restricting house sales, reports the Royal Institution of Chartered Surveyors (RICS), they also say house sales and prices will stay flat until banks and building societies release more cash, especially to first time buyers.

Meanwhile, the main high street banks advanced gross mortgage lending of £7.9 billion in April, a figure unchanged over average lending in the past six months but 5% lower than gross lending in April 2010.

British Banking Association statistics director David Dooks said: “Individuals and businesses continue to save more, pay off debt and borrow less as uncertainty about the economy has entrenched a ‘wait and see’ attitude. However, banks are still able to meet the need for home loans even though demand remains weak.”

Buyers, lenders and estate agents are sitting in wait of action by the Bank of England to increase interest rates and expect the housing market to show little movement pending a bank rate decision.

The bank has suggested through several statements recently that economic recovery is more important than meeting inflation targets, and has hinted rates may not rise for some months yet.

Simon Rubinsohn, RICS chief economist, said: “BBA data released this morning continues to show a flat trend in the volume of mortgage approvals. This is broadly consistent with the results of the latest RICS Housing Market Survey which suggested that sales expectations were only marginally positive for the coming months.

“Critically, the low level of transactions in the sales market is resulting in more activity in the private lettings markets where rents are continuing to increase as demand outstrips supply.”

Estate agents criticised the government for causing property market stagnation by not offering more help to first time buyers.

NAEA president Michael Jones said: “Although regional variations do remain, this latest report indicates that the housing market is showing some overall resilience to economic pressures.

“This continued stability might well be attributed to the Easter break at the start of April, a time when our agents saw increased house hunter activity and the bulk of their sales for the month, which could have cushioned against the drop off towards the tail end.

“It is, however, disappointing to see the market share for first time buyer’s decrease for a second month in a row. Although in-line with figures from this time last year, the Chancellor’s Budget, which made special concessions for this group has had little effect so far. Had the government focused on fiscal stimulus across the wider property market, we might well have seen some much needed upward momentum instead.”



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