Wednesday, 1 June 2011

Home loans down

A fall in house prices in the next few months are likely with the announcement today by the Bank of England of a record fall in mortgage approvals.

The number of loan approvals for house purchase fell by 4 per cent to 45,166 in April and was lower than the previous six-month average of 46,179.

Remortgages were also down – by 10% to 28,091 in April. The trend is moving down since February. There were 31,201 loans approved in March, and 35,501 in February. The decline since February is a staggering 20.8%.

Of course what the figures don’t indicate are the number of people applying for loans. But with the uncertainty about jobs and large public expenditure cuts it is likely that those that feel confident enough to seek a mortgage are few and far between.

Many would be house owners will look to the rented sector to meet their housing needs, putting more pressure on the social housing sector to meet the housing needs of many young people in Wales.

Labour in its manifesto was pretty vague about its commitment in this area. “We will help deliver the extra homes required to meet increased housing need by making housing a higher priority in the coming decade.” Where's the bacon in that.
No, Huw Lewis, the new housing Minister will need to spell out the numbers. How many new homes are the government going to build, where and by when. The Bank of England figures underline the urgency of the need.

The figures also give a pointer to the rest of the economy. For a depression in the housing market does not give grounds for optimism in the rest of the economy. It would take a brave or foolish man to bet on  growth in Wales in the near future.

Much retail expenditure is home centred and if housing is in the doldrums, the rest of the economy will also have its head in the towel.

Whilst much of the root of the problem lies with Westminster, the Welsh Government can play is part by developing a radical housing policy.

Let us hope that there will be some indication soon that Mr Lewis will move away from the platitudes in his party's manifesto and gets to grip with his new responsibilities. Complacency is not an option.

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