Seasonal jump for housing market
The hot weather seen in June and early July helped boost house prices and mortgage lending for a further month, but experts say the improvement is just a seasonal jump.
Mortgage lending picked up during June, with banks approving an estimated £12.3 billion in loans. This is up 17% from April, says the Council of Mortgage Lenders (CML), which compiled the data. Meanwhile, house prices rose for the fifth month during July, according to Rightmove, although this was only by 0.6%.
The online property portal says buyers keep to take advantage of low prices are now putting their own homes on the market, leading to a 20% increase in new seller numbers. It also reports “unseasonally strong” traffic on its website.
Miles Shipside, commercial director at Rightmove, says it now appears that last winter was the prime time to pick up a property bargain, as prices and sentiment were at their lowest levels.
“In most parts of the country prices have consistently improved during spring,” he adds. “With growing confidence that we’ve passed the bottom, buyers are more active, although they may discover that many of the best buys have gone.”
However, Shipside says that, with no significant improvement in the mortgage market, house prices are likely to stay flat for most of 2009, ending the year around 7% up.
The CML admits that despite the 17% increase in mortgage lending in June, on an annual basis this remains nearly 50% down. Meanwhile, lending during the second quarter of 2009 was unchanged from lending during the first - an estimated £33.3 billion.
“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,” says Paul Samter, economist at the CML. “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.”
The CML continues to forecast gross mortgage lending will be just £145 billion this year.
Andrew Montlake, director at independent mortgage broker Coreco, says: "These latest figures reflect more of a seasonal jump than a long-term improvement. Lenders are still not lending enough to meet consumer demand and where lending is taking place, this is coming at a price.”