The Bank of England reported approval of approximately 48,018 loans for November homebuyers. This is an increase from the 47,315 mortgage loans approved during October. This slight rise put an end to six consecutive months of decline in housing purchase approvals. Despite this good news, economists warn that housing prices will continue their descent.
A stable market is reflected by between 70,000 and 80,000 mortgage approvals in a month. Compared to one year ago November, the number of properties sold at auction increased 12 percent, reported the National Association of Valuers and Auctioneers (NAVA). NAVA Chairman Melfyn Williams stated that it is currently the perfect time to make property investments via the auction market.
Low savings account interest rates have made it nearly impossible for savings-focused consumers to get a real rate of return on any investments. That is, after tax and inflation are taken into account. Mr. Williams believes that money will build faster by making property investments than by leaving the cash in a bank account.
Despite this continued green light for real estate investors, some economists are warning of continued restricted mortgage lending. Capital Economics economist Paul Diggle stated that from an historical
standpoint, mortgage lending is “incredibly low.” He said that it will remain so throughout 2011, weighing on home prices. He blames consumer income pressures, the increased VAT, and the large fiscal issues for contributing to “subdued levels” of mortgage approvals.
All of this equates to good news for those lucky few who have enough cash on hand to purchase real estate outright. Housing prices should continue to fall and though mortgage approvals experienced a slight increase in November, they are not likely to move much during 2011. For those who have the most liquid of assets, a property purchase may be the best return on their investment.