Approvals dip ‘expected’ with election and Brexit, but ‘market will recover’
Figures from the Bank of England last week showed mortgage approvals at a seven- month low in April, at 64,645, but the feeling in the market was one of resilience…
Although approvals for house purchase and remortgaging fell slightly in April, this was to be expected given the snap general election and ongoing Brexit uncertainty.
However, it’s promising to see that gross mortgage lending in April was higher than the six-month average, suggesting that the UK’s housing market has once again remained steady.
The months and weeks that precede an event such as an election are typically and understandably quieter because housing demand drops as more people adopt a cautious approach.
However, it is likely that activity will soon pick up again afterwards and, now that the main political parties have outlined significant housing promises in their manifestos, the elected government must follow through with its housing election pledges in order to tackle the housing crisis head on.
Jonathan Sealey, Hope Capital
Some think fall in prices is good for FTBs, and hope new govt will act…
Meanwhile, the decline in house prices, as spelled out in Nationwide’s latest index, received a mixed reaction…
A decrease in house prices will be welcomed by many first-time buyers looking to take their first step onto the property ladder.
First-time buyers are the lifeblood of the property market and their presence allows others to move up the ladder and keep the whole market moving.
The need for a greater supply of housing has appeared in all the political party manifestos and we hope that, following the general election, these promises will acted on. As a country, we are facing a housing crisis as many buyers struggle to save up for large deposits, which in turn is putting more pressure on the widening affordability gap.
To ensure market fluidity we need to see significant investment in our country’s housing stock..
Richard Sexton, e.surv
…while others say dip is driven by affordability models, and is welcome
While this month’s Nationwide report suggests that house prices have decreased by 0.2 per cent month on month, it also shows that prices increased by 2.1 per cent annually, which is still in line with the Nationwide’s prediction – along with those of other industry bodies, such as the RICS – that house prices will, on average, increase by circa 2 per cent over the course of 2017.
There will naturally be commentators who suggest that this is the start of an overall market correction.
But, equally, considering that we are still seeing annual house price growth, albeit at modest levels, coupled with an ongoing paucity of stock in many areas of the country, it’s possible that the figures reflect the ‘froth coming off the top’ in terms of vendors being more realistic about their selling price.
There could be a few drivers for this but the likelihood is that, as mortgage borrowing is governed by lenders’ affordability models, those buyers who come to the market are armed with what they know to be their upper limit in terms of what size mortgage they’ve been approved for. This means there is little or no room for negotiation on the price of a property because they can’t ‘go back and borrow a little bit more’ in order to meet a vendor’s full asking price, and these are reported to have been quite ambitious of late in many areas of the UK due to a lack of available properties for sale.
As market activity remains relatively stable in most parts of the UK, with demand still seeming strong, it’s perhaps also reasonable to suggest that prices do need to soften slightly and come back into line with reasonable expectations if we are to see a viable market for the rest of this year.
Brian Murphy, Mortgage Advice Bureau