However if I was a buy to let investor or property owner I’d be getting nervous by eyeballing my second chart today. Even with these almost below inflation rates, mortgage approvals are heading downwards to 29,771 seasonally adjusted for January 2010 and 48,198 non-seasonally adjusted. These are falls of 30% and 17% respectively from December 2009. Falling mortgage approvals suggests less competition in the market for each house that is for sale. The red line shows historical house prices and the effect on prices the last time we saw big drops in mortgage approvals. This time however the Bank of England can’t do much more with the Official Bank Rate and really can’t (although I wouldn’t be surprised) be undertaking more quantitative easing (QE) with inflation at its current levels.
Could the rules of supply and demand finally start to work in the near future? If the big drops in approvals are not due to the poor weather then what lies ahead? I’m still not going to call a ‘Return to “normal”’ phase for the UK house market but its’ certainly getting interesting.
As always DYOR