Surveyors down-valuing are causing more transactions to collapse, says Bank of England
Increasing numbers of transactions collapsed in the third quarter as surveyors were down-valuing properties, the Bank of England says.
The central bank’s latest summary of business conditions, based on feedback on the economy among 12 regional estate agents, said the housing market has softened, especially in higher price brackets.
The feedback from regional agents said: “There were more reports of transactions falling through due to surveyors down-valuing properties, reflecting concerns about falling prices.”
The report also warned that while mortgages have become cheaper, home loans are only going to those with the cleanest credit record.
It said: “Help to Buy was regarded as crucial to sustaining demand among first-time buyers. In the residential mortgage market, both lender and broker contacts reported that competition remained intense, driven by new market entrants and low funding costs.
“However, this competition was mainly concentrated on customers with the cleanest credit history. More customers were taking out fixed-rate deals; mortgages with longer terms, in many cases over 30 years, were becoming more popular.”
Meanwhile, a report by the Resolution Foundation think tank has highlighted the struggle millennials – those born in the early 1980s – face when getting on the property ladder compared with previous generations.
The research says millennials are four times more likely to rent and half as likely to own their own property than baby boomers – those born between 1946 and the mid-1960s – at their age. Millennials also spend on average 23% of their income on housing compared with 17% among the post-war generation.
The report warns that the younger generation also face higher housing costs, smaller properties and longer commutes.
Lindsay Judge, senior policy analyst at the Resolution Foundation, said: “Across the generations, many are worried about why today’s young adults have it so hard when finding a secure place to live.
“Britain’s housing catastrophe has been 50 years in the making, but while its effects are widespread it is millennials who are truly at the sharp end. For older generations, at least rising housing costs have been accompanied by improvements in the quality and security of housing, as more families have been able to own their home.
“The big danger today is that young people are having to settle for lower quality, longer commutes and less security in order to afford a place to live, despite spending a record share of their income on housing.
“It is vital that all political leaders recognise the scale of Britain’s housing crisis which is placing an ever greater strain on families’ living standards, so that their response is suitably radical.”