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Wednesday, June 1, 2011

Disillusion hitting housing market

Disillusion hitting housing market : Proponents of the idea that growing demand and an ever increasing shortage of new housing will drive prices higher were dealt with a blow this week by the latest monthly housing survey from Hometrack. This showed that the volume of applicants registering with estate agents fell 0.5 per cent in May, the first decline in three months. And, while the volume of sales accelerated from a 0.8 per cent increase in April to 1.6 per cent, this was still a long way from the 12.6 per cent increase recorded in March.

But the Centre for Economics and Business Research maintains that a lack of supply will contrive to push house prices up 16 per cent by the end of 2015. This runs counter to the trend shown in figures from Hometrack that while demand increased by 7 per cent in the three months to the end of May, the supply of homes coming onto the market grew by 14 per cent over the same period.

Once again Greater London continues to buck the trend, helped by a strong interest in high value properties by foreign buyers. Prices in May grew by 0.2 per cent, while agreed sales rose by 3.7 per cent. At the other end of the scale, prices in the West Midlands fell by 0.5 per cent.

But the overriding factor that remains the key component in trying to match supply with demand is mortgage availability. This remains a tough challenge for first-time buyers, but, more importantly, the difficulty in obtaining finance is starting to discourage potential buyers on a more permanent basis. According to a survey by the Halifax, 95 per cent of those aged between 20 and 45 have no spare cash, no interest in saving or are trying but failing to save towards a deposit.

And figures from the Council of Mortgage Lenders back this up, with the number of successful first-time buyers in the first quarter of this year falling from 43,600 a year earlier to 36,200, and, more ominously, a long way from the quarterly peak in 2001 of 167,400. For the latest updates PRESS CTR + D or visit Stock Market news Today

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