Rics: Economic fears hit housing market confidence

| October 11, 2011

The Royal Institution of Chartered Surveyors (Rics) has today reported that the UK housing market is suffering due to fears over the economy.

However, the Institution said the number of enquiries from potential new buyers increased marginally in the month, with 3% more surveyors reporting a rise rather than a fall.

First-time buyers, in particular, are struggling to get a foot onto the property ladder since they have to put down an average deposit of 20% in order to secure a mortgage.

With house prices edging higher for the year to date, the average new mortgage has gone back up to £120,000, meaning affordability also remains a major issue for first-time buyers.

Meanwhile, the Rics report said 23% of surveyors reported house prices fell rather than rose – unchanged from August’s figure.

In addition, the report revealed that the number of sales over the quarter to August increased marginally, from an average of 14.1 to 14.5.

Commenting on the survey, Michael Newey, housing spokesperson for Rics, said: “Although it is hard to see what will give the market a lift in the near term, the announcement of a further raft of quantitative easing from the Bank of England will help to at least keep mortgage rates down.

“This, if nothing else, should ease the pressure on existing homeowners and limit the risk of a material pick-up in repossessions,” he added.

In other news today, the Council of Mortgage Lenders (CML) has reported the number of loans for house purchase rose in August.

According to the Council, there were 52,000 loans advanced for house purchase (worth £7.9 billion) in the month – up from 48,700 (£7.2 billion) in July.

However, the CML highlighted that mortgage activity is expected to remain weak due to uncertainty surrounding the UK and European economies.

Also today, official data from the Department for Communities and Local Government (DCLG) revealed UK house prices rose by 0.6% in August compared with July.

However, on an annual basis, house prices are 1.3% lower, taking the average UK house price to £208,476, according to the DCLG.

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