The recent slowdown in house sales may remain for the next few months at least, according to new research.
The amount of new mortgage approvals to house buyers in December, which have not yet been lent, increased marginally to 60,275 revealed the Bank of England (BoE).1
Despite the approvals figures being slightly higher than in November, they were down by 17% on December 2013.
Approvals had been at a monthly average of 67,203 for the first half of 2014, however the second half of the year saw that average drop to 61,669.1
Property sales in the UK rose by 14% for the whole of last year to 1.22m; the highest figure since 2007.1 However, these numbers steadied in the last few months of the year, slowing house price growth.
Recent studies found that property prices around the UK have plateaued since last summer.
Future progression
Economy experts have predicted improvements in the housing market.
IHS Global Insight’s Howard Archer says: “The first rise in mortgage approvals for six months in December reported by the BoE supports our suspicion that the weakening in housing market activity may be drawing to a close.
“Of course, not too much should be read into one month’s data and mortgage approvals are still at a low level.”1
Consultancy firm Capital Economics believes that the slight increase in approvals reflects several influences: “Housing demand is being supported by further falls in interest rates. Indeed, data on mortgage rates also released this morning showed that the effective rate on new loans dropped for the third consecutive month to just 3% in December, down from 3.2% in the summer.
“Meanwhile, rising real earnings and the reform to Stamp Duty have boosted prospective buyers’ purchasing power.”1
Help to Buy
The Government’s Help to Buy scheme was introduced in April 2013, aiding the purchase of 41,533 properties in England, says the Department for Communities and Local Government (DCLG).1
This system is designed to help people who cannot afford a high deposit, by offering them a loan towards the purchase price of a home.
In the 21 months to December 2014, a total of £1.75 billion value of loans were offered, at an average value of £42,239 each.1
Of the total purchases, 34,419 (83%) were made by first time buyers.1
Figures from the Office for National Statistics (ONS) reveal that the average rent paid in the private rental sector increased by 1.7% last year. They rose fastest in London, by 2.4%, followed by the South East at 2.1%, and Scotland by 2%.1
1 http://www.bbc.co.uk/news/business-31055557