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House sales up in 2012

Figures released by HM Revenue and Customs (HMRC) have revealed a 5% rise in the number of successful house sales last year. A total of 932,000 properties were sold during 2012, up from the 885,000 recorded in 2011, which reflects the highest level of sales seen for five years.
HMRC believes the Funding for Lending Scheme (FLS) has provided a significant boost to the mortgage and housing sectors, with a wider availability of lower mortgage rates. Chief economist at the Royal Institution of Chartered Surveyors (RICS), Simon Rubinsohn, said: "What we have had is a decent recovery in the second half of the year, helped by a little more confidence due to the FLS, which has helped give a bit more accessibility to mortgage funds."

The fact that there are tentative signs that the Funding For Lending scheme (FLS) is easing credit conditions is supported by the Centre for Economics and Business Research (CEBR). The latest Bank of England data showed that the number of loans approved for home purchases increased slightly in December.

Lenders approved 55,785 new mortgages over the month, with a total value of £8.0 billion. Both mark a year-on-year improvement, with the number of mortgages approved 6.1% higher than a year earlier, and their value up 10.4%.

This increase in mortgage approvals suggests that the FLS is having an effect, Katie Evans, economist at the CEBR said. She said: "The scheme gives banks access to more credit for longer and at lower rates when they lend more. By making mortgage credit more readily available this has allowed banks to offer higher loan-to-value ratios, reducing the deposits demanded of first-time buyers.

These figures , coupled with the news that gross mortgage lending in December reached an estimated £11.7 billion, according to the Council of Mortgage Lenders are positive indications for the housing market. The released research is brings the estimated total for the year to £143 billion, up from £141 billion in 2011.

In 2013, the CML forecasts gross lending will reach £156 billion. Commenting on market conditions in this month's Market Commentary, CML chief economist Bob Pannell observes: "We are more positive about the UK housing market and wider economy than a year ago, despite economic headwinds and downside risks.

A key reason is that lenders currently face few funding pressures, in part reflecting the funding for lending scheme. House purchase activity was robust in the fourth quarter, on the back of better mortgage availability and pricing, and we expect this to continue over the coming months."

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