Doom and gloom for the housing market
So is it finally time to call a double dip in the UK property market?
Tales of woeProperty portal Rightmove said that house prices last month fell by 1.1% compared to July. Of course, that's not enough for panic quite yet, and prices are actually up 2.6% year-on-year. But it adds weight to the growing body of evidence that the housing market has slowed down and a price correction could be imminent.
Rightmove notes that prices have now fallen by 3.4% in the last three months, as director Miles Shipside explained:
"September's fall of 1.1%, following on from the reverses of 0.6% and 1.7% recorded in July and August, means that new sellers are asking £8,016 less than those that came to market in June.
"Nearly half the 7% gains in asking prices seen in the first half of 2010 have been wiped out by recent falls and, with the less active months of November and December ahead, national average asking prices are on course to end the year where they started."
If that wasn't bad enough figures out today from the Council of Mortgage Lenders show that gross mortgage lending plunged 14% between July and August to £11.4bn, the lowest August figures since 2000 and 6% down on last year's figures.
Alan Cleary, managing director of Precise Mortgages said today's figures are bad news for the industry: "We have gone back 10 years in terms of volume. We're back to the glory days of the Blair government, the days when websites still felt exotic, and The Spice Girls were at the top of the charts.
"That's bad enough. But worse still is the fact that back in 2000, the average price of a property was about half what it is today. It's plain to see that housing transactions will remain subdued until the issue of mortgage funding is addressed."
Worse to comeThe CML reckons that things won't get much better over the rest of the year, with lending volumes likely to remain below last year's levels. Remember that the end of last year saw a frenzy of activity as potential buyers rushed to beat the New Year Stamp Duty deadline.
CML chief economist Bob Pannell commented: "The second half of 2010 was always going to be challenging. Looming public sector spending cuts are an inevitable brake on the economy in the short-term. The rate of growth in the second quarter will likely be a high point."
He said that the more downbeat tone to some of the recent data and commentary is unsurprising and likely to persist.
"But it does increase the likelihood of the Bank of England being able to keep interest rates at record lows for longer to support the economy. This will continue to alleviate payment pressures for many borrowers."
Dip or blip?Rightmove's Shipside admitted there is now plenty of evidence for those who are predicting a housing market correction: "The 'double-dippers' will be able to point to a clear downward trend, with new sellers dropping their asking prices for three months on the bounce. They can cite tough competition amongst sellers and agents struggling to find proceedable buyers for their record levels of unsold stock."
But he also said it was still possible that we are merely experiencing an Autumn blip.
"Conversely, we are also recording the lowest weekly run-rate of fresh sellers since April. This will give some ammunition to those forecasting a flatter price trajectory as it could be an early sign of fresh supply beginning to wane. However, whether you think we are bumping along the bottom of a U-shaped recovery or are about to double-dip into a W, your property will need to tick all the right boxes to sell this autumn".
The ongoing balance between demand and supply will impact enormously on house prices, and the ongoing lack of mortgage availability will continue to act as a restraining factor.
The future is still not clear for the housing market, but with each month that goes by the picture is looking more and more gloomy.
Links (opens new windowRightmove
Council of Mortgage Lenders