UK Housing Market, Do You Want the Good News or the Bad News

In what is now typical for the UK housing market; anyone reading the Guardian online today will be able to read a story that puts the housing market in a positive place, and a story that puts it in a very bad place.

Firstly the Bank of England tells us that mortgage lending increased again in November. The 60,518 mortgages approved is the highest monthly figure since March 2008, and well over twice the 27,330 recorded in November last year.

At the high point of the crisis, one of the financial research bodies (the Center for Economic and Business Research I think) cautioned that if mortgage approvals weren't more than 50,000 per month by 2010, then prices would continue falling until 2011.

Against that: the Halifax have reported that the number of first time buyers has dropped to its lowest point in 10 years, despite the fact that homes have gotten more affordable according to its measures.

The Halifax report and quoted economists have gone to great lengths to explain just how much more affordable houses are: homes are now affordable in 40% of the country, compared to 6% in 2007, and now homes in 90% of local authorities are affordable, compared to 31% last year.

Meanwhile the average age of a first time buyer has risen from 29 to 30, and for those buying without help from family and friends from 33 to 36.

It is little wonder that, according to the Financial Times Britain's leading economists are almost unanimous in their view that house prices are still too high.

"Of the 70 who answered the question, 13 believed residential property prices were now fairly valued, while 55 said they were not and two did not express a view," said the FT report.

Ross Walker, at the Royal Bank of Scotland, said: "The poor disposable income outlook, coupled to the absence of a financial sector able or willing to extend large quantities of new mortgage finance, will at the least constrain further house price gains and probably force modest declines."

Regular readers will already know that I agree with the consensus, you can read my full forecast here. Anyone sick of reading my articles will be pleased to know everyone else is returning after their Christmas break tomorrow.

Like this post? Subscribe to our feed by RSS or Email, join our newsletter(s) or leave a comment using the form below.