Fresh figures point to slowdown in housing market

House-price inflation and demand for mortgages have slowed over recent weeks, new reports are showing, reviving the debate over whether the housing boom has petered out.

House-price inflation and demand for mortgages have slowed over recent weeks, new reports are showing, reviving the debate over whether the housing boom has petered out.

Average house prices have risen by 0.5 per cent this month, the slowest pace this year and the fifth consecutive month of slowing, according to a survey of estate agents.

Hometrack, the property website, said the slowdown was driven by a 0.2 per cent fall in prices in central London while prices in east London failed to show any growth.

However, the survey is a stark contrast to reports from the major lenders. Halifax said prices surged by a record 4.3 per cent in September while Nationwide estimated a 2.1 per cent increase.

"The housing market is slowing down," said John Wrigglesworth, Hometrack's housing economist. "This might seem to fly in the face of the statistics but we feel strongly that what we see is right."

He said the Hometrack survey was based on 7,500 details of transaction prices recorded by 4,000 agents across the country, making it more up to date than the lenders' view.

Meanwhile, the Council of Mortgage Lenders said the volume of home loans slowed to £10.6bn in September from August's £12.1bn. Michael Coogan, its director general, said: "Lending in September was marginally lower than the record levels in July and August. Housing is still outperforming the rest of the economy and this cannot continue ... but it is too early to say if this marks the turning point."

In contrast, the British Bankers' Association said mortgage lending rose by £5bn after an increase of £4.8bn in August. "Mortgage lending remained very buoyant," said the BBA's executive director, Simon Pitkeathley.

Unsecured consumer credit – hire purchase, credit cards and bank loans – rose by £1.2bn in September, a record monthly jump, against £1bn in each of the three previous months.

The Building Societies Association added to the picture of a boom. Net lending trebled to £858m in September, up from £315m in September last year. Loans agreed but not yet made are up by 40 per cent.

City economists said there was not enough evidence to conclude that consumer demand was beginning to slow of its own accord as the Bank of England is hoping. Earlier this week Sir Edward George, the Governor, warned he would have to put rates up if the housing market did not slow.

Simon Rubinsohn, chief economist at Gerrard brokers, said: "None of this suggests that household spending is set to moderate in a meaningful way just yet. In view of Sir Edward's recent comments, it indicates that base rates are likely to remain on hold for a while to come."