Thursday, July 29, 2010
Housing market softening
Posted by David Smith at 09:30 AM
Category: Thoughts and responses

Evidence of a weaker housing market has been building for some time. Monthly mortgage approvals, after rising strongly to late 2009, have been consistently below those peaks this year. At first it looked like a combination of winter weather and the ending of the stamp duty concession, now it just looks like weaker demand coupled with restrictions on mortgage availability.

The unusual weakness of supply last year has also abated, helped by the new government's decision to abolish home information packs (Hips). Last year's low level equilibrium in the market - weak demand but even weaker supply - has been replaced by something more normal, though still a long way away from peak activity.

So prices have softened on most - not all - measures. July's 0.5% fall on the Nationwide Building Society measure, reducing the annual rate from 8.7% to 6.6%, is its first monthly fall since February. Prices are still up 4.5% this year but this can be expected to flatten further in the coming months. More here.