Money News

Mortgage lending up, house prices down

By Martin Fagan - news@consumerchoices.co.uk

Leading economists predict house prices will “fall for the next five years”.

House prices in the UK are falling, according to the latest surveys from the Land Registry and Nationwide Building Society.

According to the Land Registry, whose figures cover all completed sales in England and Wales, the average property price fell by 1.1% in March to £160,996 - 2.3% lower than in March last year.

The Nationwide's survey, which is based on the Society’s mortgage lending to customers, recorded that average house prices across the UK fell by 0.2% in April 2011 to £165,609, down 1.3% over the year.

However, the pessimism in house prices was balanced with the optimistic news of increased lending, as mortgage approvals by mutuals jumped 29% in March, revealed figures from the Building Societies Association.

Mutuals approved £2.1billion of mortgages in March 2011, up 29% on the £1.7billion approved in March 2010 and also a 29% increase on February 2011 figures.

“The housing market is creeping towards rehabilitation in the South East but, for the rest of the country, it remains a painful process,” said Richard Sexton, business development director of online chartered surveyors, e.surv.

“High [Loan to Value morgages] are making more of an appearance - but not in the volumes we need to kick-start the market into a more spectacular recovery,” he added.

In a separate report from the UK’s oldest “think tank”, the National Institute of Economic and Social Research predicts house prices in Britain will fall 4.5% this year and will have fallen 10.5% in real terms - after inflation has been taken into account - by the end of 2015.

The predicted five-year slump would be the longest period of declining house prices since records began in the 1960s.