Gross mortgage lending totalled an estimated £12.6billion in June.

This represented a 16% increase from the £10.8billion lent in May but was 3% lower than June 2010 (£13.0billion), according to new data from the Council of Mortgage Lenders. This is the highest monthly total since July last year (£13.3billion).

Gross lending for the second quarter of 2011 was therefore an estimated £33.5billion, an 11% increase from the first three months of this year (£30.1billion) and a 3% decrease from the second quarter of 2010 (£34.4billion).

Lending in the first half of this year totalled £63.7billion. This is only slightly below the first six months of 2010 (£64.1billion).

CML chief economist Bob Pannell said: "The UK economy continues to experience disappointing economic growth, strong consumer price pressures, falling disposable incomes and an uncertain jobs market.

"This backdrop weighs negatively on purchase decisions relating to home ownership. By contrast, landlord activity appears to have picked up recently and, with evidence of strong rental demand, this should help to underpin activity over the coming months. 

"UK households have made progress in bringing down debt burdens over the past year or so, but this largely stems from the restricted levels of new mortgage lending, unsecured write-offs and nominal income growth. Households in aggregate are not repaying their mortgage debt more quickly.

"Recent emotive headlines on repossession prospects appear overplayed, given that the state of our economy does not warrant large interest rate rises for the foreseeable future. But we do expect to see moderately higher arrears and possessions through the second half and into 2012, as we have previously forecast."

David Whittaker, managing director of Mortgages For Business, said:

“The buy to let market has been key to underpinning lending activity over the first half of 2011. Professional landlords and investors have taken advantage of stagnant prices, rising rents and substantial yields and this has pushed activity up. Only when owner occupiers are confident of economic conditions and lenders are willing to loosen their criteria further are we to see a substantial recovery in the overall market. But until that moment comes, investors will continue to make hay while the sun shines.” 

House prices edged up by 0.3% over the month to June according to the latest Chesterton Humberts/CEBR JUNE 2011 House Price Poll of Polls.

Although a moderate increase it is the steepest rise in eleven months. This was also the first significant monthly increase so far in 2011 and is indicative of the stabilisation of house prices currently taking place across the country.

A more consistent measure of house prices, the three month moving average is now at its highest rate of change since November 2010. Whilst this quarterly change is still negative at -0.3%, it is up from -1.5% in January, having risen in each of the last five months.

All in all, it looks as if our prediction that 2011 would be a year of two halves for the housing market is coming through.

House price growth softened in the first half of 2011, dampened by consumer fears over public sector cutbacks and associated increases in unemployment. However, the shortage of available housing in addition to overseas demand and the cheap pound are forces pushing prices in the other direction.

The market is now close to the bottom for the UK as a whole, and may even already be on the way up.

Robert Bartlett, Chesterton Humberts’ CEO, comments:

“Last months results were encouraging but this month the Poll of Poll results show a solid strengthening with house prices up across the country.  London’s house prices increased by 0.6% between May and June, the steepest increase of any part of the UK, once again demonstrating the capital’s attractiveness as a destination for foreign investment.
 
“London is also the only part of the UK where house prices are now higher year on year. House prices have risen by 3.5% over the year to June. Traditionally July and August are quiet months with little market activity.  At this point however, many of our London offices are working at peak levels with properties regularly turning over within a month.  The key to continuing recovery is whether the market sustains this level of activity through the rest of the summer.”

Douglas McWilliams, Chief Executive of CEBR, comments:

“The housing market has performed relatively well over the last month, given that the Royal Wedding bank holiday weekends almost definitely reduced the number of homes coming onto the market and kept sales pinned down. Nevertheless, buyer interest has held firm, which is down to a more optimistic view of the future as improvements in the wider economy, supported by low interest rates have instilled confidence. There is still however, a two-speed recovery in house prices, with houses at the bottom end of the market still seeing sizeable falls”.

House prices in 2011 Quarter 2 (April to June) were 0.5% lower than in the previous quarter according to Halifax. This was the smallest quarterly fall since 2010 Quarter 2 (0.0%).

In its latest House Price Index for June 2011 the average UK house price in June was broadly unchanged from that in December 2010 on a seasonally adjusted basis.

On an annual basis, prices in June were 3.5% lower as measured by the average for the three months to June against the same period a year earlier. This was an improvement on the annual rate of -4.2% recorded in May.

Low interest rates have helped to improve affordability. Typical mortgage payments for a new borrower have fallen from a peak of 48% of average disposable earnings in mid 2007 to 28% in 2011 Quarter 2. This key measure of affordability is at a better level than the long-term average over the past 25 years (37%) and is an important factor supporting housing demand. Mortgage rates have fallen from an average of 5.84% to 3.85% over this period.

Martin Ellis, Halifax housing economist, said:

"House prices in the three months to June were 0.5% lower than in the previous quarter. This was the smallest quarterly fall in prices since the second quarter of 2010. There was a 1.2% rise in prices in June.

"Low interest rates, an increase in the number of people in employment and some tightening in market conditions earlier in the year are likely to have been the main factors behind the recent improvement in price trends. A slowly improving economy and sustained low interest rates should help to support broad stability in the market over the coming months.

"The market is, however, likely to continue to face significant headwinds which are expected to constrain housing demand. Low earnings growth, higher taxes and relatively high inflation are all continuing to put pressure on household finances."

UK house sales slumped in June, according to an on-the-ground survey.

Estate agency boards firm Agency Express says that both house sales and new For Sale listings took a backward step, each making double digit falls.

The number of houses where For Sale boards converted to Sold June fell by 13.7% compared to May.

However, it is not unusual for house sales to fall in June as this has happened in five out of the last six years.

It was a far from uniform pattern across the UK: four regions had an uplift in monthly sales in June while others experienced significant falls.

The North-West had a really good month with a 26.3% increase in monthly house sales, as did Scotland, where the number of houses ‘Sold’ rose by 17.7%.

House sales in Wales were up 8.6% and in the West Midlands 2.8%. In the East Midlands, sales remained at May’s levels.
 
The heaviest falls in house sales in June were in the South-East (-18.8%), Greater London (-15.9%), Yorkshire (-14.9%) and the South-West (-14.8%).

Leicester was the city with the greatest increase in monthly house sales in June with a massive rise of 55%. Three other cities experienced an increase – York (20.4%), Newcastle (14.9%) and Milton Keynes (8.5%).

Across the UK, the number of houses that were put up ‘For Sale’ in June went down by 10.2% compared to May.

Again there were significant regional differences over the number of new ‘For Sale’ listings. Greater London was up 3.4%. However, the North-East saw a dramatic fall of -24.4% and Yorkshire saw a fall of -19.2% fall. In the South-West there was a drop of -16.5% and the East Midlands was down -15.1%.

A recent report from the Chartered Institute of Housing (CIH) published on 21 June predicts 100,000 first time buyers excluded from the housing market in 2011.

The UK Housing Review Briefing, released to coincide with the CIH annual UK conference in Harrogate, shows that continued low levels of house building, combined with little improvement in the supply of mortgages and the barrier of high deposits will leave lower income families still unable to afford their own home.

The newly updated housing market statistics and commentary from leading academics Hal Pawson and Steve Wilcox forecast a subdued housing market which is both a contributory cause and a symptom of a slow and uncertain economic recovery.

The Briefing also casts doubt on the prospects of the supply of rented homes meeting growing demand from both potential first time buyers and lower income households waiting for scarce social housing. 

Latest household projections show that the number of households in England and Wales is due to grow at a rate of 245,000 per year, while we are building fewer than half of the homes we need to keep pace.  The New Homes Bonus in England is predicted to boost house building numbers by between 8 and 13 per cent by 2016/17, and greater freedoms for councils in Scotland to build new homes is already making a difference.  However, housebuilding rates for the UK show only the very modest beginnings of any recovery from historically low levels - and are currently producing less than half the level needed to keep pace with household growth.

Sarah Webb, CIH Chief Executive, said: “Whilst people in all parts of the housing sector are working hard to try to provide new homes in all tenures, it is an uphill struggle. The new homes bonus is set to make a small difference and planning reforms will also help, but the time has come for more than incremental measures.  We need much more focus on housing in economic policy, and we need politicians and practitioners to work together to find new ways to promote affordability, secure sufficient investment, and face up to the demographic timebomb.”

Steve Wilcox , co-author of the Briefing, said: “The housing market and policy challenges ahead for the government cannot be underestimated. Stronger interventions are required to improve the supply of mortgage finance, especially for first time buyers without access to substantial deposits. The government also needs to reconsider its approach to dealing with housing costs within its wider welfare reforms. The current proposals are too complex, and fail to provide the transparency required for effective work incentives.”

House purchase approvals by banks during May were 15% lower than for the same month a year ago.

The average value lent, £147,700, was also lower, by 1.9%, than May 2010.

Altogether in May, just 30,509 house purchase mortgages were approved by banks, up very slightly on April’s figure of 29,747 and in line with the average monthly figure for the last six months of 29,917.

Remortgaging figures were also subdued at 21,519 – down on the six-month monthly average of 24,571, the British Bankers Association said.

Banks are responsible for around two-thirds of all UK mortgages.

Simon Rubinsohn, RICS chief economist, said: “It provides no evidence that the mortgage log-jam is easing. Indeed, the number of new mortgages issued in May was pretty much in line with the average for the first five months of the year.

“Significantly, it was also close to the average for the second half of last year. At the very least, this suggests that the greater number of mortgage products on the market do not appear to be having a material impact on activity.

“This may be partly a function of the additional costs associated with some of these products and the strict criteria regarding availability, as well as the cautious attitude from potential home buyers in the current economic environment.
 
“It is hard to see market turnover picking up in the near term. Key indicators from the latest RICS Housing Market Survey remain downbeat, most notably with new buyer inquiries.

“There is a strong regional element to this, with demand holding up better in London, the South-West and Scotland.

“However, the relatively buoyant picture in these areas masks a much flatter demand in other parts of the UK.”