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Housing market recovery in the balance?

Housing market recovery in the balance?

Category: Mortgages

Updated: 29/09/2009
First Published: 29/09/2009

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 It is now over 6 months old so the content may be out of date.

The Government has been called upon to ensure the UK's banks and building societies are lending to potential homeowners, as annual figures show sales and property values have slumped in the last 12 months.

House prices declined in August, albeit by just 0.1 per cent. However, homes have now fallen in value by 9.4 per cent in the last 12 months, with falls especially pronounced in the north of the country.

"The Land Registry House Price Index shows that continued problems with banks giving their customers credit and concerns about job losses are having a real impact on the housing market in the UK," said Brendan Barber, general secretary of the Trade Union Congress (TUC).

"Last year, around 60,000 homes were being sold every month. Now that figure has fallen to about 40,000."

There has been much talk of a revival in the sector over the last few months, but the number of new mortgage approvals fell in August compared to July, from 52,404 down to 52,317, according to today's Bank of England figures.

It is the first time in ten months that the number of approvals has fallen.

Furthermore, HM Revenue & Customs has reported that house sales fell in August.

"Gross lending was subdued in August, but appears to be at broadly similar levels to recent months after seasonal factors are adjusted for. However, the market remains very depressed compared to previous years," confirmed the director general of the Building Societies Association, Adrian Coles.

There is now a concern that without support, the upturn in the housing market may well stall. "The Government needs to keep putting pressure on banks to lend their customers money to keep the housing market and the wider economy moving," said Mr Barber.

"We also want to see the fiscal stimulus maintained to move the UK out of recession as soon as possible."

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