UK property prices, property sales and housing loans continue to fall

Written on:October 12, 2012
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UK houses

Lack of housing loans for first-time buyers affects property sales

UK government’s Funding for Lending scheme seem to have failed to improve lending to first time buyers in the UK property market as purchase loans are 7% lower than last year and lending to borrowers with small deposits has dropped steeply over the last three months.

Another research pointed out that house sales fell 24% in September as property prices fell partly as a result of the Olympic effect, with the UK house prices slightly down on a monthly basis and annual UK house prices increase slowing to 2.2%.

According to e.surv chartered surveyors, housing loans in September fell to 47,603, the third worst September since records began in 1993. The fall in loans was steepest among first-time buyers.

Richard Sexton, business development director of e.surv, said, “The mortgage market has been struggling since June and is considerably weaker than it was this time last year. The period between August 2011 and May this year marked a real upturn in lending. But that fillip planted false hope. Since then, the effects of the double dip recession have sapped the confidence lenders have in the economy. That, combined with a squeeze on the funding lenders get from the money markets, has dragged down lending.”

David Newnes, Director of LSL Property Services whose figures showed a drop in house transactions, said, “The lack of lending, especially to first-timer buyers, is choking off first time buyer sales outside of prime London, while uncertainty over job prospects in many parts of the country is still affecting sentiment of many prospective buyers.”

Newnes said that the substantial impact of the Funding for Lending scheme is yet to be seen on property sales, property prices and numbers in the property market. He said that lenders are confident that it will lead to increased funding for home buyers, and expects that credit availability will increase significantly in the final quarter of the year.

“If this is the case and the cheaper finance reaches those waiting to purchase their first home, it could provide a welcome new impetus for transactional activity, and a new source of optimism for would-be buyers”, Newes hopes.

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4 Comments add one

  1. Anthony says:

    Watched a program last night on ITV about people trapped in their property.They kept going on about the shortage of properties on the market,saying that is the reason for high prices.Not once did they mention the cheap credit that was available over the years.It’s simple if the cheap credit wasn’t available they wouldn’t be this expensive.

    Now that the cheap credit has gone people can’t afford the prices ,and the people who bought with cheap credit are trapped in a home that isn’t worth what they paid for it.There’s no point the government trying to prop up the market with more cheap credit,it’s not working.

    The property market is doomed and it is holding back the economy.

  2. Richard says:

    Yeah…nobody wants to lend so how can anybody buy?

  3. Sam says:

    I had approached a bank for housing loan but with their tightened credit structure, i couldn’t get to show them that i’m credit-worthy enough to deserve their credit. It’s ridiculous how they make a common man suffer and let fraudsters get away.

  4. Harry says:

    It has been really difficult to get credit for housing loan. I’m struggling to buy a house as there are no user-friendly credit schemes.

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