Housing market suffers fresh double blow

The housing market has suffered a setback with a fall in the number of mortgages approved, along with evidence of a drop in prices.

The number of home loans across the UK has stalled with no change in November of last year from the previous month, according to the Council of Mortgage Lenders.

There were 44,000 loans provided for house purchases, which was down 15 per cent on November 2009 when some buyers were trying to beat the end of the stamp-duty holiday. And house prices in the west of Scotland fell by 3.8 per cent over the course of last year, according to separate figures released yesterday. A weak final quarter of the year pushed prices down, according to the Glasgow Solicitors Property Centre (GSPC).

Selling times also rose marginally to 94 days in the last three months of 2010, up from 90 days in the previous quarter.

The mortgage figures showed a 4 per cent rise in the number of people remortgaging during November, with 26,000 loans advanced to people switching deals. This was still 12 per cent down on a year before.

There was also a slight rise in the number of first-time buyers entering the market, although this was also well down on a year earlier, with those getting on to the property ladder paying an average 20 per cent deposit.

"It is encouraging to see credit criteria becoming a little more liberal for first-time buyers," said Michael Coogan, director general of the CML. "But the funding and capital constraints on lenders will continue to exert a dampening effect on lending, and criteria are unlikely to loosen substantially."

The sales figures for the west of Scotland saw average prices ending the year about 5,500 lower than they were at the start of the year, falling from 133,500 at the end of 2009 to 128,000.

A strong recovery in demand, coupled with a shortage of supply in the first half of the year sent prices sharply up, rising by 9,000 in the spring and early summer.

But low mortgage availability throttled demand and a substantial rise in the number of homes for sale meant that supply outweighed the number of buyers with access to a mortgage.

The heavy snowfall in the last few weeks of the year also brought the market to a premature halt.

Prices in the region peaked at 149,000 at the end of 2007 and have fallen back by around 14 per cent over the last three years.

"We expect broadly stable prices but a very low level of transactions," said GSPC chairman Martin Samuel of the coming year.

In Glasgow alone, prices dropped by 4.3 per cent over the year to 135,130.