Buy to let investors will be disappointed at Bank of England figures released this week which suggest the housing market recovery may be flagging as mortgage approvals stall.
The bank statistics reveal there were 49,815 loan approvals for house purchase in May, marginally lower than 49,828 in April and below the previous six-month average of 51,856.
The 12-month growth rate rose to 1.1 percent but the three-month annualised growth rate fell to 0.8 percent, from one percent in April.
Meanwhile net mortgage lending increased by £1.2 billion in May, stronger than the April rise of £1 billion but just below the previous six-month average of £1.3 billion.
There were 25,759 approvals for re-mortgaging, lower than in April and below the previous six-month average of 26,443.
And 24,656 approvals for other purposes were also lower than in April and below the previous six-month average of 25,565.
Vicky Redwood, senior UK economist at Capital Economics, says the figures are evidence the market is stagnating.
She said: “The number of mortgage approvals for new house purchase was broadly unchanged in May at 50,000, with approvals only 2,000 higher than at the start of the year.
“Admittedly, weak activity has not stopped house prices from rising over the past year. But there are also now tentative signs that the increase in prices is running out of steam.
“We still think that the market will weaken in the second half of the this year.”
This train of thought is backed up by statistics from the Land Registry’s House Price Index, which shows the market has suffered a blip.
It demonstrates that house prices dropped by 0.2 percent from April to May this year despite an annual rise of 8.2 percent.
It is the seventh consecutive month when the annual figure has risen but the first monthly decrease since March 2009.
The price of an average England and Wales property is now £165,314, with all regions experiencing increases in their average property values over the last 12 months.
London has had the biggest increase of 14.2 percent while the North East saw just 1.8 percent.
The South East also had the biggest monthly rise, 0.9 percent, and the East Midlands had the largest fall of 3.6 percent.
During March 2010 the number of completed house sales in England and Wales rose by 37 percent to 48,577 from 35,449 in March 2009.
David Smith, senior partner at property consultancy, Carter Jonas, explained: “The May Land Registry statistics are indicative of a market that is beginning to harden at its current level.
“Although the market as a whole is hardening at or around its current level, sought-after properties in desirable locations may see further price rises, whereas undifferentiated properties in certain areas may see falls.”
