Demand for home loans fell sharply again last month with British banks reporting a 13 per cent drop in approvals for September.
The drop to 29,300 from 33,700 approvals in August came as one housing expert prepared to slash his forecast for 1996 house price rises to just 2 per cent. Rob Thomas, an analyst at the Swiss banking group UBS, said he would be revising downwards his earlier forecast of a 5 per cent rise next year.
"After the weakness suffered by the market this year, it is hard to see how it will be possible for house prices to show such a marked rise so quickly," Mr Thomas said. "I am still optimistic, but I do not believe things will pick up dramatically in the short term."
A drop in approval numbers is often expected in September, at the end of the home-buying season. But Roger Brown, director of statistics and information at the British Bankers' Association, said the comparable drop last year was 4 per cent. "One would not want to read too much into one month's figures but they do show that mortgage lending in September was subdued for banks," he said. Seasonally adjusted lending fell from pounds 597m in August to pounds 546m last month
Exact comparisons with last year are difficult because of the addition of figures from Cheltenham & Gloucester, the building society recently taken over by Lloyds Bank.
But Ian Shepherdson, an analyst at HSBC Greenwell, claimed the seasonally adjusted figures from the BBA showed the market was now on the mend "The danger with looking at statistics like this in a superficial manner is that they do not tell the full story.''
Although the early part of the year was a disaster for the housing market, seasonally adjusted figures for loan approvals from banks and building societies showed a consistent rise in the past four months, up 19 per cent, he said.
Inland Revenue transaction records also showed a 3 per cent rise in September over August. "If we add this to the slight house price rises recorded by Halifax and Nationwide in the past couple of months, there are signs that the situation is changing."