Stats hint at a drop in UK house prices

MORTGAGE lending slipped for the second straight month in September, the Bank of England revealed yesterday, while a separate study released this morning exposes dwindling confidence in the likelihood of house prices holding up.

More people expect house prices to fall over the next year than those expecting any rise, a survey by the Halifax shows.

With 30 per cent of respondents expecting prices to fall, compared to 28 per cent forecasting an increase in prices, the survey’s balance came in at minus two per cent. In April, a positive balance of nine per cent expected prices to rise over the subsequent 12 months, yet economic turmoil over the summer has dented sentiment.

Ongoing stagnation is the most likely outcome for the coming year in the housing market, with 57 per cent of respondents expecting no movement in prices greater than five per cent in either direction.

Over a quarter of those surveyed (27 per cent) anticipate no change in the average UK house price between now and the same time next year.

However, the capital is the most bullish region, with a positive balance of 13 per cent of surveyed Londoners expecting house prices to rise.

Meanwhile, the Bank of England said yesterday that mortgage approvals numbered 50,967 in September, down from 52,347 in August. The numbers remain well below the pre-crisis long run average of around 90,000, analysts said.

Net mortgage lending also weakened, to rise by £300m in September from £500m in August, half the amount forecast by analysts.

Despite the downturn, building societies claimed yesterday to have increased their number of mortgage approvals by 33 per cent over the past year. Gross mortgage lending from building societies was up four per cent annualised in September, the Building Societies Association claimed.

Yet Nida Ali of the Ernst & Young Item Club was downbeat about the market as a whole. “Mortgage approvals are at less than half their pre-recession peaks, while lending levels are just a fraction of their long-term averages,” she said. “In this uncertain economic environment, it is no surprise that households are eager to lower their debt burden.”