The latest statistics from the Council of Mortgage Lenders and the Royal Institution of Chartered Surveyors (RICS) appear to show further depressing evidence of the state of the property market. Yet underneath the bad news come fresh indications that property market experts believe that better times may not be too far away.
Fewer sales
Surveyors again made fewer sales per person last month than the month before, blaming mortgage lenders for not making sufficient finance available. Over 80% of surveyors reported that house prices were still falling in October. However, the proportion fell by 2.7% against a month before, suggesting some signs that the market is beginning to bottom out.
The RICS figures suggest regional variations in transactional activity. London shows the least sales per surveyor, with East Anglia and Wales also displaying below average market activity. Sales activity is much higher in the north-east region. Further falls in sales activity in the near term seem likely, as the ratio of sales to stock has fallen to the lowest level since the end of 1992.
Mortgage lending down
Lower sales activity was confirmed by statistics published by the Council of Mortgage Lenders (CML), which reported that lending in September was less than half of that of a year before and 15% below the figure for August.
Average loans to first time buyers also fell - down to £104,500 from £108,000 in August. The figure peaked at £119,250 in July last year. The subsequent fall reflects both a reduction in prices for homes and an increase in deposits required from first time buyers. There has been a slight fall in the proportion of a home's value borrowed by those moving home.
Positive signs
The CML said that the temporary withdrawal of stamp duty on homes worth less than £175,000 was having a positive effect on house market activity. It added that recent indications of improved mortgage pricing - following the latest base rate cuts, lower interest rates being charged on inter-bank lending and an increase in inter-bank lending availability - should feed through into more affordable and more available mortgage lending.
RICS also sees signs of optimism. In London, 37% more surveyors expect sales to increase than expect them to fall further in the next three months. Last month, the figure was -2%. Across the country, there is a net balance of 20% of surveyors expecting sales to increase, while in the south-west there is a 47% positive balance. RICS says this reflects a much greater willingness by sellers to reduce prices, in line with current market conditions.
RICS spokesperson Ian Perry said: "Fortunately, many vendors have finally started to accept current market conditions and are dropping their asking prices to achieve a sale. Sales should increase in the coming months as more and more sellers understand that greater realism is the only way to make that long desired move."
Still profits for some
The Nationwide Building Society showed that despite the difficulties facing its major banking competitors, there are still opportunities for large profits to be had from mortgage lending. Its latest figures - which mostly cover a period prior to the worst impact of the market decline - showed an 11% increase in pre-tax profits, to £374m.
Nationwide's chief executive Graham Beale said: "Our resilience proves that the building society business model can be particularly effective during turbulent market conditions in providing both security and good value to members." He added: "Wholesale market conditions remain fragile and we expect the challenging economic environment in the UK to persist well into 2009."