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High deposits holding housing market back

High deposits holding housing market back

Category: Mortgages

Updated: 09/08/2011
First Published: 09/08/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Activity in the housing market remained flat and house prices slipped lower during July, according to the latest Royal Institution of Chartered Surveyors (RICS) data.

More surveyors reported that prices fell rather than rose last month, meaning the reading has now been in negative territory, and prices have been falling, for over a year.

The number of homeowners wanting to put their property on the market fell back during the month, despite seeing a slight upturn during the early part of the summer.

With prices continuing to slip, RICS said it appears that many potential sellers are unwilling to accept reduced selling prices, so are reluctant to enter the market.

Elsewhere in the survey, although interest from potential house hunters has been relatively flat since the start of the year, new buyer enquiries edged up slightly in July.

At the same time, however, the average number of sales per surveyor over the last three months dipped to 14.2, the lowest level since June 2009, while pessimism still surrounds the future.

More surveyors expect prices to fall rather than rise over the next three months, although sales expectations are more upbeat.

RICS spokesperson, Ian Perry, said the size of the deposits required by lenders appear to be a stumbling block for many would-be buyers.

"While the holiday season appears to have had some impact on the market, the continual problem of inaccessible mortgage finance is still preventing first time buyers from accessing the market," he added.

"Unsurprisingly, with prices continuing to fall, many would-be sellers seem unwilling to lower their expectations and are reluctant to place their property on the market."

While the mortgage market is not as awash with products as it once was, the number of deals available has been steadily rising.

Last month, Moneyfacts.co.uk revealed that the number of mortgage deals is currently at a more than two and a half year high.

Further good news for first time buyers is that there are currently 326 products available at 90% loan-to-value and above, which therefore require a deposit of just 10% or less, up from 222 at the same point last year.

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