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Housing Market Reaches Its Peak?

Figures for July from the British Bankers’ Association show that the number of loans taken for house purchase was at its lowest level for three months. Although it is still too early to judge for sure, the signs are that the housing cycle has reached its peak, and that we will now start to see a downward trend firstly in demand and then in terms of house prices.

Demand, it would seem, has already begun to dampen. The successive rate increases made by the Bank of England are now showing their effect on the housing market, with less new mortgage approvals during July and surveyors from the Royal Institution of Chartered Surveyors reporting a tailing off of demand.

House prices are remaining robust, while a downward trend is appearing; this is a downward trend in terms of growth, not in prices. In other words, the value of houses is still appreciating, just at a slower rate than it has been in the past.

Despite the demand from house buyers falling, the level of mortgages taken out may well remain the same, if not increase. This is down to the fact that many people who took out fixed-term deals one or two years ago are now coming to the end of that period, and are looking to remortgage to take advantage of a better rate than the standard variable rate that their existing mortgage reverts to.