According to an article in the Mortgage Finance Gazette, there has been a drop in mortgage approvals for the month of June compared with May. The figures show that there were 47, 643 loan approvals for house purchases, which was lower than the May figure of 49, 461 Furthermore, Nationwide reported that house prices fell by 0. 5% in July. Commenting on the figures Martin Gahbauer, Nationwide's Chief Economist, said: "House prices fell in July for the first time since February.
All of this points to a stalling of the property market. While home owners decide whether to stay or sell and house hunters decide whether they can afford to move or to find a decent mortgage, the property market looks to be slowing down. The Land Registry has reported that house prices are back at the level they were at in 2006.
It could be the case that property prices are beginning to plateau having steadily risen over the past months so we will just have to wait and see whether this is a minor blip or whether it is as a direct result of the tightening in the lending market and of people being extra cautious in these times. At present there are far more properties on the market than there are buyers for them. This has come about for a number of reasons, including the scrapping of the HIPs packs.
The spending cuts announced by the new government will affect many people be it through tax cuts or loss of employment. My guess is that people are now sitting tight and being frugal, not knowing how financially well off they will be over the coming year. They are therefore not committing themselves to buying a property until things settle down and the lending market loosens up a bit.