In its latest report, the Royal Institute of Chartered Surveyors (RICS) has confirmed that the upturn of housing market activity at the beginning of the year has well and truly ended. Its monthly survey of members who work as estate agents shows that sales fell in April, for the first time since September 2011. The reason cited for this was the cessation of the stamp duty holiday for first-time buyers, on March 24th. The survey also found that house prices were continuing to fall across the country, except in London.
Peter Bolton King, housing spokesman for RICS was not surprised by the findings: “With the recent surge in activity brought on by the stamp duty holiday coming to an end, it is unsurprising to see that prices across much of the country are beginning to fall. Renewed concerns over the economy and talk of a double-dip recession dominating the headlines in recent weeks may well have served to undermine consumer confidence. What’s more, the continuing lack of affordable mortgage finance is still hindering many first-time buyers who cannot afford to get a foot on the property ladder.”
The RICS survey was the latest evidence that the surge of activity during the first three months of the year has faded. Both Halifax and Nationwide house price indices have shown a fall for the month of April. The Bank of England has evidence that the latest downturn happened sooner than that, stating that the number of mortgage approvals fell sharply in February and March, after a brisk January.
Financial experts say that the lack of easily available mortgages is the single biggest factor that is keeping the housing market in the doldrums. Although interest rates are at an all time low, and have not risen for more than three years, lenders continue to raise their mortgage rates due to the rising cost of wholesale funding. Tougher criteria on interest-only loans are also blocking a traditional route into the market for first timers. Measures brought in recently by the FSA have prompted some lenders to stop offering the product all together.
Sources: bbc.co.uk, rics.org (image courtesy of londonlovesbusiness.com)