Last week Nationwide reported that less than half of UK homeowners (49%) expect to see the value of their property increase over the coming six months. The building society said it was a completely different picture three months earlier, when 64% of borrowers said they thought the value of their home would continue to rise.
Earlier in the month, the Nationwide House Price Index had already revealed that the growth in house prices was at its lowest for two and a half years, showing that prices had risen by just 0.1% in August. This view was supported by the Halifax, which actually reported a fall in house prices of 0.6%, and The Woolwich, which found that in August 56% of homeowners thought the value of their properties would rise, compared with 62% in July and 65% in June.
More concrete support of this trend came from the British Bankers’ Association which revealed that the total number of mortgage approvals fell by 20% in July, down to 70,756, which is almost 90,000 fewer approvals than the same period last year.
Now of course none of the above data is really surprising, given that commentators have been predicting a fall in house prices since the start of the year. The Bank of England in particular has been shaking its head in despair at mounting consumer debt, pushing up interest rates to curb borrowing, only to read another lender report showing that borrowing and house price rises are continuing regardless.
This time, all analysts agree that the data shows a definite cooling of the housing market, hence no rate change from the Bank last week. But you do wonder how much of a slowdown there really is.
For example, another quick look at the headlines reveals that property is still the most popular form of investment in the UK, according to GMAC-RFC. The specialist lender found that 46% of people favour bricks and mortar over savings accounts and the stock market.
And several house builders have released healthy profits over the last few weeks, reiterating their plans to build more property, stating that the housing market is either returning to normal, or completely rejecting the notion of any major slowdown.
Confused? Well just think how homeowners must feel.
The fact is that there are so many surveys and reports about the housing market at the moment, it is sometimes impossible to see the wood for the trees. Especially when this data is used by analysts to predict future trends and probably plays a major part in the decision making process of the Bank of England when it sets rates.
And let’s be honest here, all these reports are public relations tools. No matter how relevant or reliable the data it is, the main aim is to promote the company that has produced it.
This is not necessarily a bad thing, but when the combined results of such data could contribute to another £50 being slapped on to the monthly mortgage payments of a borrower, isn’t about time we had a single, authoritative, industry-wide measure we could all depend on?
It might not generate as many headlines, but it would bring some much-needed balance to the subject.