HOUSE PRICES

Published:20 September, 2010

Author: tydemans

HOUSE PRICES

House prices fell and mortgage lending dived to a 10 year low in August as signs intensified of a deteriorating property market. Latest figures provide further evidence that housing recovery may have peaked

Gross mortgage lending fell 14% from July to stand at 11.4bn the lowest level for August since 2000, according to the Council of Mortgage Lenders.

The CML's warning that activity in the property market remained ''exceptionally'' weak last month came as property website Rightmove reported that house prices fell for the third month running.

The CML said lending volumes were likely to remain below last year's level in the coming months as activity was buoyed by the upcoming end of the stamp duty holiday in the last few months of 2009.

CML chief economist Bob Pannell said ''We face the prospect of a difficult second half of the year.

''However, the Bank of England is likely to keep interest rates at record lows for longer to support the economy. This will continue to alleviate payment pressures for many borrowers.''

Meanwhile Rightmove blamed an ongoing ''supply hangover'' as sellers in England and Wales dropped their average asking prices by 1.1% in August - the third consecutive monthly fall.

The group said property values had now slipped by 3.4% in the last three months, wiping out half the gains they made in the first six months of the year

Miles Shipside, commercial director of Rightmove, said ''The surge of extra stock has left the market with a real supply hangover.

''Sellers' attempts to hold onto price gains made earlier in the year have suffered from a relentless stream of fresh property.''

Separate figures from the Bank of England showed mortgage approvals for home purchase loans made by Britain's six biggest lenders Santander, Barclays, HSBC, Lloyds, Nationwide and RBS - fell to 45,000 in August from 47,000 in July.