Housing sales remained muted in September as gross mortgage lending tumbled to its lowest for a decade – a figure described as "a shocker" and "truly dire".
Adjusted figures from HMRC show 77,000 transactions took place last month, compared with 74,000 in August.
But figures which had not had the benefit of seasonal adjustment show house sales in September actually fell, from 82,000 in August down to 78,000.
The adjusted figure for this September shows a slight fall from the 78,000 transactions last September.
All the figures show what a long way the market has to go: in 2006, there were 149,000 house sales (seasonally adjusted) in September – about double the figures now being seen.
Meanwhile, gross mortgage lending in September fell to its lowest level for a decade, said the Council of Mortgage Lenders.
Its figures were issued as all eyes were turned on the Chancellor’s Spending Review and have been largely buried as a result.
Gross lending totalled an estimated £12bn, down 1% from £12.1bn in August and down 7% from September 2009 (£12.9bn). This is the lowest September total since 2000 (£10bn).
Gross lending in the third quarter was an estimated £37.4bn, a 9% increase from the second quarter but down 4% from the third quarter of last year.
CML director general Michael Coogan warned: “Lending volumes do not seem likely to increase substantially towards the end of the year. Funding pressures on lenders remain, and the practical implications of government and public spending cuts are beginning to emerge, with a resulting impact on consumer confidence.”
Brian Murphy, head of lending at independent mortgage broker Mortgage Advice Bureau, said: “The September figures are a shocker – down on August, usually the quietest month of the year, down on last September when we were still in the grips of recession, and no sign of the traditional post-summer bounce in mortgage activity, which doesn’t bode well for the rest of the year and early 2011.
“We knew it was going to be a quiet autumn in light of the Spending Review, but this is worse than many had feared. Although there are some very competitive products available at lower LTVs, the market as a whole is still very weak and is unlikely to improve in the current economic climate.
“With buyers as cautious as lenders, this is going to be a long, hard winter, and further downward pressure on house prices looks inevitable.”
David Whittaker, managing director of specialist buy-to-let lender Mortgages For Business, said: “These figures are truly dire. The CML must now bite the bullet and admit that gross lending for the year is likely to be £125bn. There is no point in continuing to skirt the issue.
“It’s been encouraging to see some lenders re-entering the market, but so much more needs to be done if the industry is to return to any semblance of health. The Government has to take responsibility: it’s about to flood the rental market, having cut social housing, so it needs to encourage lenders and landlords to increase activity.
“With lending now as low as in 2000 and house prices around double the value, it doesn’t take a Nobel mathematician to work out that we can’t continue like this.”
Gross mortgage lending tumbles to lowest for a decade
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Comments
OOPS - sorry Cassandra... I missed this one so apologies for not responding sooner. Okay - here goes. Bear with me - this may take a novel or two to answer you in full. In fact, there are four issues to address:
1. Not at all. Firstly, 'keeping prices high' and attaining the best offer are poles apart. I do not subscribe in the least to the suggested wholesale slashings that certain individuals posting here are advocating - but that does not mean that if I were marketing property on behalf of vendors I would suggest (or agree to) marketing at unattainable figures. I have said ad nauseum, a property will sell for what a buyer will pay for it - call it £x. Unless you ask £x plus £y to allow for negotiation, then you are never going to get £x, as buyers will ALWAYS offer less than the asking in this market(or indeed MOST markets). The '£y' does not have to be a telephone number - but a buyer is looking for a deal - so give them one. If the vendor is upsizing, then their utopia is to sell high: buy low. Why is this not possible? Sell through an Agent who acts in the best interests of the vendor: buy through an Agent who cares more about their targets being achieved. Simples!
2. Not if my above answer is correct. (and it IS!)
3. NO to part a); ABSOLUTELY NO to part b). Firstly, there is NO guarantee that lending will improve if house prices fall. In fact, lenders may be even more reluctant to lend, fearing total collapse. Secondly - an Agent CANNOT consider their fee as a factor in a transaction! The vendor is the only factor to consider. In a market where transaction rates are falling, then fee levels need to be increased to compensate. Half the transactions = twice the fee required for each transaction. Anyone NOT get that one?
4. If that one sale, of a CORRECTLY PRICED AND MARKETED property, results in a profitable business, then so be it. I would NEVER short-sell my vendors in order to improve my own cashflow. That is tantamount to fraud in my opinion - and in direct contravention of the very legislation that Estate Agents are bound by.
I am NOT talking the market up - but I will NOT allow the market to be artificially talked down without voicing my own opinion.
Oh - and as I am NOT an Estate Agent, all the above is pure speculation anyway. Except it's not. Been there: done that, through the last 'bust' cycle. And lived to tell the tale - by increasing fees by 75% per unit.
PeeBee,
When you aim to keep prices high for your vendors do you realise that you are costing them money if they are upsizing?
They would be better off if prices fell, as the gap they need to fund would be smaller.
Also with the banks having less money to lend then the more house prices fall then the more mortgages can be supplied. Don't you realise that the more sales then the more commission you make?
Is your utopia to have just one sale each year of an astronomically priced house? Because that's what estate agents continually talking the market up are heading towards.
Okay, Mike (I feel I know you by now... ;0)) - at last we now see we have some common interests to talk about. My lads are both in rented property. I hate the idea of it with a passion. They would both dearly love to buy their own properties but cannot. My parents were in rented all their lives - as were most of their generation. They weren't bothered - who was, then? - it was the way it was. Here's the problem I have: My desire for my lads (and yours...) to have their own homes CAN NOT and WILL NOT cloud my judgement as to my purpose in employment - which is to sell property; and to maximise the values paid by the purchasers. This does not mean I want to see them rise exponentially - it simply means that whatever the 'market value' is, I will achieve it. Price stagnation for the next xx years would be no problem for me; neither do I have Kriptonite-like fear of price reductions! If it happens, it happens - I simply won't lie down and let it happen easily! I simply aim to achieve best value - and that is what those employed in the property industry are duty bound to do. MY beef is when they don't because it suits them not to. Targets do not negate an Agents' responsibility to their clients. You want the best you can do for your lads; as do I for mine. However, when you are buyer and I am seller, we are diametrically opposite and will never agree. I propose we agree to disagree - but we can both do it in far more amicable ways than we have resorted to and for my part, I apologise. I look forward to our continued (if slightly subdued...) debate on this and other matters. Regards, PeeBee.
If you end up in dire straights like matey is predicting for us all, post on here you need a holiday and I'll work out a deal or get in touch via dingledell wesbsite.
Berkshire Agent: Your comments also confirm to me what I suspected to be the case. Fear not, I will NEVER forget how I got where I am today. And I look forward to where I will be tomorrow. Technology is a wondrous thing. They have cameras that take photos in colour these days; cars you don't need to wind up to start; and house buyers that STILL need good, old fashioned skill and determination to convince to buy at the best possible price for the vendor. Embrace the old ways, young Sir/Madam/Prefer-not-to-say... - if you do, you will do well in the future I promise you ;0)
Haha! Well said, Jonnie - very refreshing to read your comment amongst others after many other crazy (/stupid - excuse my manners) posts!
The 50% price reduction got me. That'll lead to a few funny discussions over the weekend. Shall we agree to this realistic (and extremely well planned) decrease for 1st November? The market will take an absolute hammering so far it might never recover, but Mark Wilson's kids will be able to afford a house, so it's all for a good cause.
Have a good weekend all.
Oh, nice – I like Croyde a lot – was there this summer, had to tent it, couldn’t afford a chalet, not on an estate agents wage.
Sadly for you (and my fondness of Croyde) ive done my target for the 2010 already and my year end bonus is looking like it might stretch to Spain.
The cars gonna have to do another year though but if you want a 5 series with star ship mileage next autumn im your man.
I've got a Chalet at Croyde if you are interested in going somewhere new next year Jonnie.
Nice – I like the banter / input but do look out – as Berkshire has pointed out Happy Renter is on the blog!!! - first entry, right at the bottom – spitting fire!!
Now, Happy Renter – I thought I had replied to one of your posts recently to put you straight on this but apologies if it wasn’t you…….ill let you into a secret that will help you be less of a mixed up, angry little soul and hopefully make you an even happier renter.
Now, listen up, pin your lugs back and all that……………agents don’t control prices, honest we don’t mate, wish we did because rising prices aren’t all they could be for us, we like nice steady market, predictable, sustainable and with plenty of choice so people can find what they want.
I don’t want to pee on your fireworks but on top of this most of us that are going bust have gone, we have just had 3 years of a drop in volumes that none of us knew was coming – but we have all reduced our costs beyond levels we ever thought possible – gone into or expanded our rental businesses and are now trading well – ive said before my car is a bit old and my holidays are in Devon rather than abroad but we are all managing to feed our kids and have enough left for a beer at the weekend
Now hopefully this will help you sound better informed although the venom you have posted with does suggest theres more to it, did your Mrs run off with an estate agent or were / do you just have no idea…………………..its one or the other, im right aren’t I?
Mr. PeeBee:
I, like you, just own one property, my family home and, again, like you, I have two sons.
I would be happy to see the price of my property fall 50%. Why? So that my two sons - and your sons - and the rest of the youth of today - could aspire to sticking a roof over their head without having to take on a mortgage of hundreds of thousands of pounds which will financially cripple them all their lives.
The only people who make money from house price rises are bankers, estate agents and downsizers.
I, for one, couldn't give a stuff about any of them. I do care about our children.
As far as I am concerned estate agents, and their absurd 'no-sale, no-fee, value high to get the instruction because no instructions means no sales' business model, are an obstacle to sensible property prices.
In a rising market you force prices ever higher to win instructions and, in a falling market, your business model ensures that transaction levels fall to very low levels - strangling the market and tending to maintain a status quo in prices - helping to prevent necessary market adjustments.
Personally, I wish you were properly regulated, like Solicitors and were forced to work for fixed fees.
Happy renter, you stick to renting and save up for your deposit.
Peebee you are by the sounds of things more experienced and more maturer than me in the work place and that of life in general, which from your earlier comments confirms everything about you to me. Best wishes in the forthcoming market place and don't forget to "embrace technology" but dont forget the "old skool" theatre and salesmanship which got you to where you are today.
happyrenter: Before Jonnie feels the need to reiterate (quite rightly) for the umpteenth time in his classic style (I can't wait - need a good laugh today after you lot...) that AGENTS ARE NOT RESPONSIBLE for the 'mess' you refer to, allow me to ask you this: You are quite happy to sit in your rented property for the next 25 years (assuming the Landlord will let you/not get repossessed/fail to get the boiler serviced and the place blows up or you suffer CO poisoning...). THEN WHAT? Continue to pay rent for the next five, fifteen or more years until they drag you out slavering and talking to yourself and put you in your penultimate resting place? There is NO better long-term investment that property - NEVER has been - for the average person. Stocks; shares; gold; pork bellies - they are all punts IF you have some spare cash. But if you are paying rent, then why cannot that money be going toward owning the property you live in? This is a GENUINE question, by the way. I simply fail to see the logic behind this whole HPC movement. What I am ABSOLUTELY 100& CERTAIN about, is if prices DID come down by the million percent you all cry for; then NONE of you would be 'happyrenters'. You'd ALL own one, two or more properties in a flash - and so kickstart the cycle off again...
Happy renter....why are you on an Estate Agent website? You also must be only 5 foot tall as you obviously suffer from small man syndrome...knob.
awww...bless! Love the thinking, Berkshire Agent - but not quite right. I LOVE hot kitchens. Make myself right at home in them. Turn up the heat if you like - I'm here for a goodly long period to come, God willing! Only got by in a rising market? Okay - you pick out the years you refer to in te following that I have worked and succeeded in the housing market, and I'll tell you how I did. 1978, 1979, 1980, 1981, 1982, 1983, 1984, 1985, 1986, 1987, 1988, 1989, 1990, 1991, 1992, 1993, 1994 - you can work out the rest for yourself, I'm sure...
Any agent with an asset management department will see this through - the rest of you will be pryaing for your next probate - trust me this is nothing like 1991-1993 - this will be the death blow for you all if you dont raise yoru fees based on poor transactions levels - lobby government by all means and stop taking it up the rear as an industry
Mr Wilson: I make no secret of the fact that maintaining house prices is something I strive to achieve. The boom/bust cycle does nothing for anyone other than make some rich(er), and just as many poor(er). As an Agent, it was my duty to secure the best possible offer for my client (the vendor). In my current role, nothing has changed other than I have no client - just a boss. If achievable prices fall, then so be it - but the aim is still the same. I have no personal gain in this. I own one property - the roof over my head; I have two sons who would immensely benefit from prices coming down ten, fifteen or more % - but that is irrelevant. That should not - and DOES NOT cloud my judgement or affect my actions.
I think it's (that is correct - shortened from 'it is'...) about time that you put YOUR cards on the table. What do YOU want to see house prices do - AND WHY?
Over to you, Sir...
Peebee i get the impression you haven't or your not going to hit your monthly October target, nor did you hit September target and your coming across very, very bitter about it. Gets some reductions or learn to value at correct prices and you'll see that buyers still want to buy in "the buyers market" were now in. Peebee i bet you've only got by in a rising market and your now out of your depth. Go get a job in recruitment or something like that where "the kitchen is not so hot"!!!
A re-introduction of lending at 95% coupled with sensible criteria would allow a lot more buyers into the market, and help stabilise the current lurching in the market, and of course associated businesses - it is these firms that could help to create employment in coming years.
House prices are pretty reasonable at the moment (except in the south perhaps), but are un-affordable for those without a large deposit as we all know.
This stagnation will only ease with traditional lending - not the bonkers lending that got us into this mess.
I am selling, but not as many as I would like to first time buyers.
There is a real danger that we all believe that the world revolves around our industry.........
This mess was created by estate agents, and you are still clinging onto the same old spin "House prices only go up" "it's a great investment" the usual sh*t you lot spin. I'll be glad to see less of you in the high streets as the New Year comes in. Bankruptcy must be on the cards for most of you in this overcrowded market . . .Enjoy!
Mr Wilson: "There is nothing sensible about lending 95% of the price of something... The banks cannot lend 95% mortgages now - and probably not for a generation..." Sorry - if it makes no sense, then why would you feel they would resume? Strange contradiction of your own point, wouldn't you agree?
Mr Wilson: Uncharted territory - I agree with you. My mistake. There - happy now? Or have you perhaps other comment to make - on the actual subject of this debate, maybe...?
There is nothing sensible about lending 95% of the price of something - especially something that by most accepted measures is quite seriously overvalued.
The banks cannot lend 95% mortgages now - and probably not for a generation while they rebuild their balance sheets.
A good point, succinctly made. I'm afraid it will go over the head of your correspondent though.
Estate agents seem to think the problem is that the naughty banks won't lend in a way that will allow house prices to resume their natural ascent to infinity and beyond.
Capital adequacy requirements and the banks' massively exposed positions - due to their shenanigans with things like MBSs and CDOs - requiring many of them to park 'troubled' assets with the Bank of England are not in their lexicon.
Come on, play the game! I know estate agents like to strangle the life out of the English language but ... "for WHO's benefit"
With WHO in capitals to emphasise it!
WHO'S!!!!
Please - for heaven's sake ... it should be ...
'for whose benefit'
"it doesn’t take a Nobel mathematician to work out t..."
By the way, there is no Nobel Prize for Mathematics.
Average UK household income to property price ratio has NEVER been as low as 3:1 since 1997. The ratio stayed at three times or under from 1993. Prior to that, the last time it went any where near 3x was in 1960. 4x is nearer the long-term average.
nutbar:
1. I have no hair to gel - I pulled it out reading some of the comments from the likes of you many moons ago...
2. I have no big ties. My only ties are those of loyalty - to my family; my friends; and to those who employ me to do my job to the best of my ability. You should try it sometime.
3.I have no ego. Posting what I do here gives me no satisfaction - but SOMEONE has to...
If you want to roll over and let your targets overtake your obligations, then vendors WILL vote with their feet. Trust me - I used to be an Estate Agent! Geez... do I wish I was one now! I'd have a field day...
Hear, hear, Ray. Nice to have some backing... ;0)
@peebee
"Can I remind you of something - THIS IS NOT YOUR MONEY YOU ARE GIVING AWAY!"
Can I remind you that until its in the bank its not real money at all. Keeping prices inflated might be good for your ego but a commission based on zero sales isn't going to keep you in hair gel and big ties.
Berkshire Agent: My head is nowhere near sand, Sir/Madam/Prefer not to say..., but your grasp of what your duty as an Estate Agent appears to have left Earth's orbit! Will house prices fall - maybe; maybe not. Will I be able to stop them if they do - absolutely not. Do I have to roll over and let the HPC brigade kick my b@lls black and blue - ABSOLUTELY NOT! I will use every last trick in my book to attain the best possible prices for properties I am entrusted with. THAT IS MY JOB. Check your own job description. Better still - learn the Estate Agents Act 1979.
Estate agents. Sad really, perhaps the NAEA will setup a home for these poor little dears, bless.
Berkshire Agent.
THINK what you like about prices - but be careful about advertising and encouraging 'armageddon'.
Your job as an agent is to be as positive as you can and try to obtain the highest possible price for a client whilst still being realistic in your advice on asking prices. There is still a real danger that some estate agents are talking themselves onto the dole.
Good posts. We can see what the problem is and i bet grant shnapps knows to..so why are they not questioning it and why is the media ignoring it??? Conspiracy theorys??
Load of rubbish about affordability. 25% of 100k or 130k still = to much to get on the ladder. That is the only problem at moment- deposit amounts. The rental market woild crash as well if deposits suddenly went up to 12 months of the rent.
I don't know if you have a lettings department buy with rents on the up wouldn't it be a good time to advise your Landlord clients (the proper ones not the bandwagon BTL Johnies) The yields on rents are reasonable right now and although prices might well fall a property grab right now might will stabilise prices for them and others in a similar situation.
The vast majority of folk who haven't traded up in the past 7 years will simply sit tight now for a while so the market is going to end up as distressed vendor sales. There are bound to be a few bargains about but on the whole this is the bottom.
It doesn't matter if I am wrong an interest rate of 0.5% buys a good 7 or 8 years of waiting time which is longer than the present government term, Yvette Cooper will be the Chancellor then and the poor people will be given their credit cards back so ending the financial misery of recession.
Average UK houshold income X 3 does not equal the average UK property value.
What you are suggesting is that well over £100,000 needs to come off the average property.
The reality right is that folk who have spare equity can currently get virtually any mortgage they want at very competitive rates and fees. Everyone else has had the door very firmly shut in their face for a very long time to come.
Professional purchasers are now in control of the market and prices are going to stabilise according to rental yields rather than demand from purchasers.
Read the stories on EAT today and there is a very clear indication of the widespread social change that is about to sweep the country.
Peebee you stick your head in the sand and keep you fingers crossed prices level out or even start rising again.
Get real love!!!
If you think 2008 was a tough year you dont know what is about to hit you in 2011.
Berkshire Agent : "The sooner we all bring the prices down as that is what is required the sooner the banks will start lending...". Sorry?? Can I remind you of something - THIS IS NOT YOUR MONEY YOU ARE GIVING AWAY!! What right do you - or anyone else for that matter - have to call for prices to be slashed? IF prices adjust, then they will do so in stages the same way they have in previous times. YOU want it to happen tomorrow - for WHO'S benefit I ask? Your absurd call is in my opinion tantamount to barefaced disregard of all that Estate Agency stands for. Why don't you just say what you mean - "I want prices down so that I can hit my targets".
The banks in general wont do much business unless you have a minimum of 20% deposit simply because they are all of the opinion that prices will drop at least another 10/15% over the next 6 months and they cant afford to have further loans in negative equity.
The sooner we all bring the prices down as that is what is required the sooner the banks will start lending, and we can move the country and the economy forward.
No surprise there then - we seem to be recycling the same old stories.
We all know things are tough - we all also know that until the lenders can offer sensible 95% mortgage deals the market will remain very stagnant.
Ironically, the re-introduction of 95% mortgage deals would stabilise the whole economy, and help to get the country back on it's feet, which would help to ease other banking woes.
House price rises could be controlled by lenders adopting sensible income multiple policies rather than the fanciful 5X calculations of the recent past.
The trouble is the banks don't have enough money, and have to start re-paying the BOE after Christmas, so this is not going to get easier for a while yet.
house price > affordablity = can't continue like this.
Yes it does take one to work it out.
There isn't a Nobel Prize for Mathematics. Picky, but correct.
QE2 here we come