MOHAMMAD JAMEL, a senior economist at the Council of Mortgage Lenders (CML), has said that the housing market seems to be “moving sideways”.
He was speaking after the CML released figures showing that mortgages worth £18.4 billion had been advanced last month (April). Enormous though that sum may seem, it’s 11% down on the previous month (March). However, lending does tend to dip in the spring, and the lending in April 2017 was 4% higher than the figure for April 2016 – leading to Mr Jamal’s comments.
CML figures also showed that there were more first time buyers taking out a mortgage than existing homeowners taking out a mortgage on a new property. This may be due to various government subsidies for first time buyers, which were intended to stop house prices from falling – a policy which seems to be working. General economic uncertainty, particularly around Brexit, may also be encouraging home owners to sit tight for the time being rather than risk taking on higher mortgage repayment costs on a monthly basis.
However, HM Revenue and Customs announced a few days ago that there had been a drop of nearly one quarter in the number of property sales in April 2017, compared with March 2017. This would suggest a serious slowdown in the housing market – except that the March figures were probably inflated as landlords rushed to complete purchases before the amount of tax relief they could claim on their mortgage payments was reduced in the new financial year, which began at the start of April.
“It’s moving sideways” seems about right then. Or, to put it another way, “going round in circles”.
•The news about house prices comes as Opec, the cub for oil producing nations, have joined non-OPEC oil producers in keeping output low so that oil prices do not fall further. This will keep business costs high, particularly in the manufacturing sector – which will depress the world economy. It will continue to make alternative sources of energy financially attractive – leading to the dilemma of whether oil producers should increase prices (possibly by further cuts in production) in order to maintain their income, or reduce prices (by increasing output) in order to boost their income in the short term.
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