Mortgage approvals up, house prices down
The headlines seem to be suffering from an attack of schizophrenia over the prospects for Britain’s property market today. Reuters reports that mortgage approvals were up in January, with 44,288 home loans being approved compared to 42,343 in the previous month. That might sound like good news, but since the figure is roughly a third lower than it was this time last year, we probably shouldn’t think about popping any champagne corks just yet. Especially since the same story also reports that while increased mortgage lending hints at better times ahead, house prices are still falling.
Hometrack, a property market research group, says that house prices were down by 0.2% in February compared to January – the fifth consecutive monthly fall. This means that prices are just 1.4% higher than they were this time last year and if things continue to slide, it won’t be very long before we see a year on year fall in the value of homes, which would be a major psychological blow to a market like the UK which has grown to depend on rising property values to fund consumer spending.