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Economy in Brief

More Evidence of Weakness in U.K. Housing Market
by Louise Curley January 21, 2008

The Building Societies Association (BSA), which covers all 60 Building Societies in the UK, approved mortgages amounting to 3,144 million pounds in December, down 26% from November of last year and 21% from December 2006. The broader, Council of Mortgage Lenders (CML), which includes, in addition to the Building Societies, banks and other institutions engaged in mortgage lending, declined 25% in December from November and 21% from December 2006.

The first chart shows the absolute value of the approvals made by the BSA and total lending made by the CML. Over the past five years, approvals by the BSA have been between 11% and 22% of total mortgage lending. The second chart shows the year to year changes in the two series. The variation in the BSA data appears to be somewhat greater than that in the CML data.

The Rightmove Price index declined by almost 1% in January and is now 4.6% below the peak reached in October of last year. The Rightmove Price Index is a measure of the asking price of houses coming to market through Rightmove's 11,500 estate agency branches. The sample includes up to 200,000 houses each month, representing about 80% of the market. It is the largest and most up to date sample of any house price indicator in the U.K.

Rightmove also publishes the actual prices of various types of houses: detached, semi detached, terraced and flats. These are shown in the fourth chart. The prices of the more expensive accommodations--the detached and semi detached houses--fell, respectively, 3% and almost 1% in January. At the same time, the prices of the less expensive accommodations--terraced houses and flats rose, respectively, 1.7% and 1.8%.

 MORTGAGE AND PRICE DATA  Dec 07 Nov 07  Dec 06  M/M %Chg  Y/Y %Chg  2007 2006 2005
Approvals by BSA (Million Pounds) 3144 4238 3962 -25.81 -20.65 51739 56465 45628
Lending by CML (Million Pounds)                                               22600 29990 28617 -24.64 -21.03 362314 345217 288400
  Jan 08 Dec 07  Jan 07  M/M %Chg  Y/Y %Chg  2007 2006 2005
Rightmove House Price Index (2000=100)   187.5 189.1 181.3 -0.85 3.42 191.2 172.0 159.4
Rightmove Prices of Houses (Pounds)
Detached  324114 334039 316739 -2.97 2.33 336294 306255 284840
Semi Detached  203951 205759 195564 -0.88 4.29 205645 189.353 178630
Terraced  183324 180224 175339 1.72 4.55 183681 164884 153475
Flats/Apartments  197384 193973 189265 1.76 4.29 196167 171504 156489
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