In this week’s expert scrutiny of the latest evidence of green shoots, Simon Rubinsohn, chief economist at the RICS, examines the Council of Mortgage Lenders’ (CML) data on mortgage lending and repossessions
It is not surprising that the CML has decided to revise down its expectation for repossessions for this year from 75,000 to 65,000. Although unemployment is leaving more and more homeowners in arrears, courts are now granting repossession orders only if all other measures have been tried. In addition, the increased number of mortgage support schemes is helping to limit the fallout from the recession.
And the housing market is regaining its composure: the level of transactions has picked up and prices are stabilising, albeit largely owing to lack of supply.
That said, the CML is right to temper enthusiasm about the nature of the recovery. Mortgage finance is still in short supply for first-time buyers, and the economy’s emergence from the recession could be strewn with obstacles.
For housebuilders, the inclination to start projects is likely to remain limited, given the cost of land on most builders’ books. Where new housing schemes are initiated, they are likely to be small scale.
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