House prices slide as banks reject first-time buyers
Tuesday 14 September 2010
House prices fell to their lowest level for 15 months in August, a survey published today reveals, as the number of potential buyers continues to be limited by a shortage of mortgage finance.
The Royal Institute of Chartered Surveyors (Rics) says a greater number of surveyors reported falling prices last month than those that saw increases, with an index of views dropping by eight points to minus 32, the lowest level since May 2009.
The fall is a result of an increased number of sellers, coupled with fewer new buyers, creating a larger pool of available property and, consequently, lower prices.
Rics' update comes a day after the Council of Mortgage Lenders (CML) reported a continued reluctance among mortgage providers to lend to first-time buyers. Despite the overall number of home loans increasing by 7 per cent in July, compared to June, the number of mortgages written to first-time buyers fell by 2 per cent.
First-time buyers were on average being asked for deposits of 24 per cent in July, up from 21 per cent in April and May. Overall, the CML said that mortgage volumes "still represent a very weak market".
The situation last week prompted Steve Morgan, the chairman of housebuilder Redrow, to call on the Government to establish an insurance indemnity scheme to support first-time buyers, arguing that a lack of home loans was hampering the sector.
Rics reports that expectations of future sales have begun to pick up, with 18 per cent more surveyors expecting sales to rise in the next three months, up from 8 per cent in July.
It argues that this rise in sentiment may be attributed to the view that a dip in house prices will begin to tempt more buyers back to the market over the coming months. Expectations on prices remain muted, however, with an increasing number of surveyors seeing even softer prices in future months.
"The latest set of results suggests prices in many parts of the country may be slipping but this does appear to be encouraging hopes amongst surveyors that sales levels could begin to pick up as a result," said Jeremy Leaf, a Rics spokesman.
"That said, there can be little doubt that the restrictive attitude to the provision of mortgage finance will continue to limit transaction activity in the market," he added.
The housing market has completely changed in the last 12 months. The Halifax house price index in December last year showed that house prices had jumped by a bigger than expected 1.4 per cent in November 2009, spurred on by higher demand and a shortage of properties for sale.
However, analysts expect the current trend of house price falls to continue. "If you look at house prices versus indicators like prices or income, we reckon that prices are still 20 to 25 per cent too high," said Ed Stansfield, chief property economist at Capital Economics.
"The real question is whether or not prices can come down without derailing the economic recovery. We've got a falling market and there is little that can be done in terms of reducing interest rates to help encourage activity. And all this is before the impact of the planned fiscal tightening is seen."
Despite the downbeat housing numbers, consumer confidence is returning. The Nationwide Consumer Confidence Index for August, published today, shows that despite next month's Government spending review, which will introduce a range of spending cuts, the mood among consumers is improving. The index rose by 5 points to 61 last month, a similar level to a year ago.
Nevertheless, even after the August gains the index stands well below the long-term average of 83 and, similarly to the Rics data, Nationwide finds heightened pessimism towards the housing market. Consumers now expect the value of their homes to decrease by 0.1 per cent in the next six months, a half percentage point decrease on July when people believed their properties would increase in value.
"Downward pressure is likely to be placed on confidence in the shape of speculation over public spending cuts, a stuttering housing market and a difficult job market," said Mark Saddleton, Nationwide's head of economic and market analysis. "September's results should help to paint a clearer picture as we move into the final quarter of 2010."
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
Derek Pain: I'm cautious, but remain one of the few bulls in the market
Donald MacInnes: Who would want to be a Barbie girl in a non-Barbie world?
Mark Dampier: How to get an income now that savings are past the 'use by' date
Thousands of UK investors could lose out following collapse of Secured Energy Bonds
Bargain Hunter: Fly off for a winter break in France or Portugal for well under £100
- 1 Venezuela Expo Tattoo 2015: Extreme body art from 'Vampire Woman' to 109mm earlobes
- 2 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 3 Ball pool for adults opens in London
- 4 Game of Thrones season 5 trailer: The first full-length look is here
- 5 Rashida Jones speaks out against male-centric porn saying 'women should have sex and feel good about it'
9 reasons Greece's experiment with the radical left is doomed to failure
Have we reached 'peak food'? Shortages loom as global production rates slow
Greece elections: Syriza and EU on collision course after election win for left-wing party
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
King Abdullah dead: We can't afford not to hold Saudi Arabia's royals to account
iJobs Money & Business
£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...
£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
Day In a Page
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion