Britain’s housing market is in the dumps, as if you hadn’t noticed, but at least it’s transactions that are tumbling rather than prices. Bank of England mortgage approvals figures this morning were a sobering reminder that the housing market is drying up. Lenders approved 10% fewer home loans in July than June, considerably worse than expected and 25% less than the pre-pandemic average. The data came shortly after Zoopla, the online property portal, said the volume of sales this year will drop to its lowest since 2012.
For the moment, that’s as bad as it gets. With buyers sitting things out and sellers able to wait, the price of the average UK home is slipping — but it’s down just £5,100 from last November’s £292,700 peak, according to the Office for National Statistics. In real terms, it looks worse. House price inflation, which edged up 1.7% in the year to July, is a quarter of consumer price inflation. It hardly matters, though. As long as nominal prices are rising, the threat of negative equity recedes.