Loans market central to housing market downturn

17 September 2008

Severe restrictions on lending are the root cause of the decline in the housing market over the past year, an expert has claimed.

Jon Neale, head of development research at Knight Frank estate agents, said that the stagnant loans market has seen house prices falter.

"People simply can’t get the mortgage finance (…) to make the house purchase. If you look at the amount of houses which are being sold at the moment, then it’s at historically very low levels," he said.

Despite houses being more freely available than at the height of the housing market boom in 2007 – estimated by RightMove to have risen from seven houses per buyer in mid-2007 to 15 per buyer in May this year – the underlying problem with supply of loans has caused the market to slow down.

The problem also affects personal loans and other forms of credit. Credit is still available, but talking to the right provider has become more important than ever.

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