House Prices Fall Amid Lower Demand For Mortgages
27 September 2010 / by Rachael Stiles
After making progress towards a recovery, house prices have been slipping lately, among fears of spending cuts which are driving down mortgage applications.
House prices fell 0.4 per cent in September, figures from the British Bankers’ Association show, and industry experts predict that house prices could fall 10 per cent as mortgage approvals drop.
There was a 22.3 per cent decline in new lending in August compared to the same time last year, according to the BBA, the lowest monthly level of lending since Spring 2009, prompting speculation that house prices were likely to follow.
In the meantime, mortgage rates have fallen and lending criteria have started to ease, making it a buyer’s market for those who are looking to purchase.
Data from the property website Hometrack.co.uk shows that demand for housing fell for the second consecutive month in August, which it says is partly seasonal but also part of a larger six month downward trend.
The fall in demand and subsequent fall in property value is “more than a seasonal blip”, according to Hometrack’s director of research, Richard Donnell.
Hometrack’s research reveals that in August, the supply of homes available grew 2.4 per cent – well above the five year average of 0.8 per cent.
Demand for housing has fallen two per cent over the last five months, while supply has increased 14 per cent, which Hometrack says is contributing to the current decline in house prices.
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