Wednesday, August 12, 2009

LONDON, England

Britain’s housing market is slowly stabilising, though activity is still low compared to previous years due to the recession, industry bodies said yesterday.

The Council of Mortgage Lenders said gross mortgage lending in the United Kingdom rose by 23 per cent in June compared to the previous month but still lagged at about half of year-ago levels.

The trade association for the mortgage-lending industry said there had been 45,000 house purchase loans for a total of £5.9 billion ($9.7 billion) in June – up from 36,500 loans in May.

Government statistics showed that house prices rose 2.6 per cent in the quarter ending June 2009, after falling 3.8 per cent in the quarter ending March 2009.

While that left average house prices 10.7 per cent lower than last year, the overall rate of the fall has slowed from a 12.7 per cent year-on-year fall in May, according to data released by the Communities and Local Government Department.

Council of Mortgage Lenders economist Paul Samter said low interest rates and realistic selling prices had helped house sales, but added “there is some way to go before we reach normal levels of activity”.

There were 34,000 remortgage loans – loans taken out against existing property – approved in June. That was 13 per cent higher than the previous month but still lower than normal. There were 96,000 remortgage loans approved in the second quarter of the year – 21 per cent lower than the previous quarter.
First time buyers appear to be re-entering the market, taking out a total of 17,200 loans with £1.9 billion in June, up from 13,700 loans in May but down from 18,400 in June 2008. The typical buyer has a 25 per cent deposit – a level unchanged since February.

Meanwhile, the Royal Institution of Chartered Surveyors said there is some evidence that the housing market is picking up from historically low levels. It said buyer inquiries continued to grow strongly in July, although the pace of growth was lower than June. It also said eight per cent more of its members reported seeing house price falls instead of rises in July, compared to 18 per cent in June.

It said sellers were also putting their homes on the market – the number of new instructions increased since June – the first rise since May 2007.
IHS Global Insight economist Howard Archer warned that the numbers did not mean the housing market had made a
full recovery.

“We certainly do not think that a sharp sustained upward trend in house prices is in the process of developing,” he said. “Any sustained rise in house prices will mean that affordability pressures will move back up at a time when still pronounced economic weakness, sharply rising unemployment and low wage growth is negative for the housing market.”