UK housing market remains subdued

House keys Confidence among potential buyers has been hit by the economic climate and the eurozone crisis

An estate agents' group has described the housing market for first-time buyers as "fragile" as other figures suggest the sector is stagnant.

The National Association of Estate Agents (NAEA) said sales to first-time buyers fell to the lowest level in seven months during May.

The lack of activity has been reflected in the latest housing equity figures.

The Bank of England said that housing equity withdrawal remained negative in the first three months of the year.

The £8.8bn injection of equity reflected low levels of sales and some mortgages expiring, rather than owners making an active effort to pay off their mortgages more quickly.

The level was similar to the £8.5bn injection in the previous quarter.

'Turbulent time'

The boom years of UK housing market in the last decade saw a high rate of housing equity withdrawals.

This was mainly driven by buyers taking on more debt in order to move into a bigger property, or borrowing money against the rising value of their home to buy other items such as a new car.

This process seemingly ground to a halt when the financial crisis hit in 2008.

The figures would be more likely to turn again if first-time buyers started to secure mortgages in large numbers again.

However, the NAEA said that confidence was low, with 17% of overall house sales made during May going to those buying their first home, compared with 24% in April.

"At what is a very turbulent time for the economy both here and in the eurozone, which has prompted tighter mortgage restrictions from the major banks and placed increased pressure on household finances, the government should be doing all it can to stimulate housing market activity," said NAEA president Mark Hayward.

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Features

  • Shinji Mikamo as a boy, and Hiroshima bomb cloudLove and the bomb

    The Japanese man who lost everything but found peace


  • Northern League supporters at the party's annual meeting in 2011Padania?

    Eight places in Europe that also want independence


  • scottie dogShow-stealers

    How Scottie dogs became a symbol of Scotland


  • Hamas rally in the West Bank village of Yatta, 2006Hamas hopes

    Why the Palestinian group won't back down yet


  • The outermost coffin of Tutankhamun 'Tut-mania'

    How discovery of Tutankhamun's tomb changed popular culture


BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.