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The level of lending in the UK mortgage market is woefully small. Last month the
CML estimated lending in August 2009 stood at only £12.6 billion. Gross lending
was 37% lower than it was in August 2008. The numbers only look better when compared
to May - when lending was down by 58%.
The news is a little better than the bald numbers suggest. In August, the lending
mix moved in favour of lending for house purchase, at the expense of lower levels
of remortgaging.
Low lending volumes continues to restrict activity. Transaction volumes remain way
below average. Although the number of transactions increased each month from a low
of 27,200 in January 2009, to more than double that in July 2009, this figure still
represents a decline of 48% from the long run average of 105,270 property sales
per month, over the seven-year period 2001 to 2007.
Compared to the boom years, it's quieter than a funeral in a library.
We shouldn't get carried away with some of the good news we've been hearing either.
Activity levels have risen gently from the lows around the turn of the year and
yes, prices have increased over the last few months. But those prices are being
artificially supported by a restricted supply. Kesh Thukaram at smartlandlord.co.uk
has gone so far as to call the recent house prices rises as “a false dawn in a mini
bubble.”
The effect is most pronounced when different types of housing are compared. In the
year to September, the weighted average price of detached houses fell by only 12%
- with a 3% drop in volumes. But flats - where the average decline in price has
been a far more modest 5% - have seen a 38% decline in volume. Price falls have
been steeper for housing types that are more readily available for sale. |
