Housing recovery was ‘overstated’
Mortgage approvals for house purchase fell for the first time in 13 months during December, prompting speculation that the housing market recovery may be running out of steam.
The number of mortgages in the pipeline for people buying a new home dipped to 59,023 during the month, down from 60,045 in November, according to the Bank of England.
The figures came as property intelligence group Hometrack said that January had seen the cost of property remaining static nationwide. The group also reported a fall in both the number of new buyers and sellers coming to the market, and the level of sales agreed, and it warned that the general health of the housing market may have been ‘overstated’.
Andrew Goodwin, economic adviser to the Ernst & Young Item Club, said: “The small fall in mortgage approvals is consistent with the idea that the mini house price boom is running out of steam. It is clear that underlying demand remains relatively subdued and, with pressures from low supply likely to fade, we expect prices to flatline through this year.”
The Council of Mortgage Lenders expressed concern that the fall in mortgage approvals during December pointed to a ‘bunching’ in transactions as people rushed to beat the end of the Government's stamp duty holiday.
But Howard Archer, an economist at IHS Global Insight, said: “The dip in mortgage approvals in December reinforces our suspicion that housing prices are likely to suffer a limited relapse during the coming months, and will be essentially only flat over the year as a whole.”