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News: Weekly News Round Up - Positive Sales and Lending Figures Emerge

Mon, 27 Jul 09

Much of the recent slice of optimism within property market news has focused on price stabilisation. Last week it was the turn of sales and lending stories to give home buyers and sellers reason to be cheerful.

According to among others HM Revenue and Customs (HMRC) and the British Bankers’ Association (BBA), sales are picking up and lending conditions are getting better.

Among the most eye-catching figures last week was data from HMRC that shows property sales increased by 15% between May and June – see Home News 22 Jul 2009.

Its latest report into housing market activity shows that 75,000 residential properties costing more than £40,000 were sold during June.

Of course seasonal factors, such as the traditional increase in sales during the early summer period, need to be taken into account.

But even the HMRC’s seasonal adjusted figures show that sales are increasing. Although the seasonally adjusted rise between May’s figure of 63,000 and June’s of 65,000 is modest by comparison, June’s figure is still the highest seasonally adjusted monthly total since October 2008.

HMRC’s quarterly property sales figures are also up, even when seasonally adjusted.

Property sales rose from 141,000 in the first quarter of 2009 to 198,000 in the second quarter.  Taken into account seasonal factors the figure for the second quarter of 2009 is still 191,000, the same as the third quarter of 2008.

The increase in sales is helping to ensure prices stabilise. According to

Home.co.uk’s latest asking price index for July, the average mix adjusted asking price for homes on the market in England and Wales rose by 0.3% between June and July.

Banks are also approving more mortgages, according to the BBA.

Its figures show that mortgage approvals rose in June to 35,235, from 31, 919 the previous month.

Significantly this is up 65% on June 2008’s figure, showing that the rise is no mere seasonal blip and that mortgage lending conditions appear to be getting more favourable.

David Dooks, the BBA's statistics director, said: “The number of new home loans approved by the high street banks is recovering from the very low level last November and so far this year, gross mortgage lending has topped £50bn. After repayments and redemptions, the banks’ net rise in mortgage lending of £18bn in the first six months is in sharp contrast to lending by the rest of the market, which is still contracting.”

However not all property analysts see these figures as cause for optimism. Andrew Montlake, a director of mortgage broker Coreco, told the BBC: "Some recent mortgage figures, including the BBA's, have led some to suggest things are finally beginning to pick up, but I don't buy it.

"From where I am standing, the next few months are still going to be exceptionally difficult for borrowers and this will only change once the lenders begin to lend - and they are still not lending at levels sufficient to drive a sustained recovery in the property market."

Remortgaging is an area of lending that has been particularly badly hit, as borrowers prefer to stick with their current standard variable rate deals, which are still largely favourable compared to latest fixed and tracker deals.

The BBA figures show that the number of approvals for remortgaging rose slightly in June, compared with May, to 28,133, but this was down 52% on a year earlier.

Commenting on the latest BBA data Royal Institution of Chartered Surveyors’ chief economist Simon Rubinsohn said: "The increase in mortgage approvals for June follows the positive lead provided by the RICS 'new buyers enquiries' series which is continuing to show growing levels of interest in the housing market. Indeed, the reading on this indicator in the June survey was sufficiently strong to suggest that mortgage approval activity will rise further over the coming months.

“That said, it is important to recall that the absolute level of mortgages being sanctioned is still low by historic standards and consistent with a relatively fragile housing market.”
Gross mortgage lending in June was also up, according to the Council of Mortgage Lenders, to an estimated £12.3bn. This is a 17% increase from April’s figure of £10.5bn.

The CML however is urging more caution than RICS. It adds that June’s gross mortgage lending figure is still roughly half June 2008’s figure of £24.8bn and stresses that seasonal factors cannot be ignored.

CML economist, Paul Samter said:  “The pick-up in June’s lending largely reflects seasonal factors, and these may well support lending volumes at moderately higher levels over the rest of the summer. But the combined effects of the restricted nature of mortgage funding, reduced number of active lenders, weak labour market and limited consumer demand are likely to hold back any significant and underlying improvement. Our forecast for gross mortgage lending of £145 billion this year is unchanged." 

 

By Joe Lepper

 

See also: Asking Price Index, House Prices and Trends by Town and Postcode, Mortgages

 

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