Approvals for house purchases have been steadily declining over the summer resulting in September’s figures being the lowest number since July 2013. The six month average for house purchase approvals was 63,727.
The number of remortgage approvals increased from 30,500 to 31,238 while the six month average stood at 31,400. The number of approvals for other purposes, which includes equity release was 9,403. This was up from 9,241 in September but still below the six month average of 10,043.
Gross lending secured on dwellings was £16.6bn, 6% lower than September’s gross lending which was £17.1bn.
Rob Wood, chief UK economist, for Berenberg Bank, said tighter regulations continued to reverberate through the market.
“Disruptions from regulations introduced during the Spring and possibly the Bank of England’s actions during the summer continued to hit the housing market.
“It is notable that approvals had recovered a little over the summer before slipping again in the past four months. That may be related to bank’s tightening credit conditions sharply during the third quarter, along with increased focus on mansion tax proposals from the opposition Labour party in recent months.”
Wood said he expects these disruptions to pass in the New Year particularly if the Labour party continue to lose ground in the polls paving the way for positive housing market conditions.
“With inflation now likely to stay lower for longer after oil’s slide, mortgage interest rates are falling again. Banks plan to ease up on credit restrictions, wages are finally stirring and the recovery should pick up pace again next year,” he said.
Berenberg’s prediction for house price growth next year is 8% driven by demand outpacing supply.