UK housing boom tapering off

18 June 2003
The UK housing market is set for slower growth in the months ahead, according to mortgage lender, The Woolwich, despite indications of growing confidence among buyers.

Over half of the 1000 people interviewed during May (52 per cent) forecasted house price increases in the summer and beyond, beating the 51 per cent in April.

Though the end of the US-led war against Iraq, traditionally upbeat seasonal sales receipts, had added to the positive mood, the Woolwich said slowing earnings growth, depressed bonus payments and increased household taxes would eventually take hold and discourage punters to gamble of rocketing house prices.

Andy Gray, the Woolwich's head of mortgages said: 'A slight upturn in confidence is unsurprising and reflects the fact that jitters surrounding recent geopolitical uncertainty, particularly emanating from the Middle East, have now subsided.

'More importantly people are more upbeat because the spring period traditionally heralds a pick-up in activity in the housing market.

'But, when you take these factors out, it is difficult to get away from the fact that double digit house price growth is unsustainable and over the coming months this will have a moderating influence on people's expectation that the value of their home will continue to rise.'

With people happy to remortgage on their properties in the current low interest rate climate, the lender said it estimated total mortgage lending during May rose to £22.7 billion from the £20 billion in April, a 13 per cent increase.

The Woolwich survey comes after a survey from the Royal Institution of Chartered Surveyors (RICS) found that house prices across England and Wales fell for the fourth month in a row.

RICS housing spokesman Ian Perry said the market remained 'sluggish' because of continued weak demand, with the south of England witnessing downward prices.

25 per cent of the 285 chartered surveyors questioned claimed prices had fallen in the latest three months.