Housing market knocked by price falls
Asking prices dipped slightly during June following four months of rises as a result of the mortgage famine and the number of new properties being put up for sale.
The latest house prices survey from property website Rightmove shows a 0.4% fall in house prices during the month. This follows a 2.4% rise during May.
Despite a 10% increase in the number of people putting their homes on the market, Rightmove says housing stock remains low with some regions suffering from a 40% fall in property for sale in the past 12 months. At the same time, lenders continue to restrict the availability of mortgage to those with large deposits and squeaky clean credit histories. This is preventing many potential buyers from ‘mopping-up’ less saleable stock and repossessions.
Estate agents report there are currently four buyers for every available property – but despite evidence that interest in buying property is on the up, this is not translating into significantly higher sales. According to the Bank of England, 16,000 mortgage applications are rejected each month.
However, the Rightmove house price index suggests that 2009 is certainly shaping up to be a healthier year for the housing market than 2008 with prices up 6% during the year so far.
Miles Shipside, commercial director of Rightmove, says: “For the equity-rich, 2009 has turned out to be the year of the property deal. Those with a good deposit and a stable job are now finding they can afford a better property than two years ago. This puts them in pole position to snap up the short supply of saleable property in the most popular areas.”
In terms of recovery, Shipside believes the south of England will start to benefit before the north.
“The south appears to be leading the way in terms of increased activity as it has a higher concentration of the mortgageable equity-rich,” he explains. “Conversely, this means property coming onto the market is in shorter supply as there are fewer forced sellers.”
London, in particular, is a case in point. The year-to-date supply of homes being put up for sale in the capital is down 52.3% compared to the same period in 2008, and asking prices are down by 0.5%.
In contrast, the northern regions have seen 33.8% fewer properties coming to the market; this supply means property prices have remained depressed, and asking prices have been cut by 10.5%.
“It’s a mistake to confuse the upturn in enquiries and sales with a return to a more normal market,” Shipside warns. “While conditions are much improved on the darkest days of last year, we are now starting to see some big distortions and wild swings due to the combined effects of recession and restricted mortgage availability.”
So, buyers able to get a mortgage are able to be pickier about where they buy, so popular areas with good schooling are in while blocks of flats and terraces homes are out, he adds.
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