Momentum slips from property market

The property market is losing momentum, new figures reveal.

The latest Bank of England figures show that the number of mortgages approved in April was lower than it has been for seven months.

This has news comes after Nationwide found that house price growth is stuttering (full story), leading many to conclude that the UK property market could be in for a slowdown.

"The Bank of England data suggests that housing market activity may be starting to lose some momentum, having picked up markedly since spring 2005," said Howard Archer, chief UK economist at consultancy firm Global Insight.

However, while lower than in recent months, mortgage approvals are still above their long-run average and 12.8 per cent higher than in the same month last year.

But after a positive start to 2006, with house price growth beating forecasts, analysts are seeing this latest run of weaker data as indicative of a quiet few months ahead.

Milan Khatri, chief economist at the Royal Institution of Chartered Surveyors (Rics), commented: "A modest slowdown in the housing market is backed up by Rics estate agents who have reported that new enquiries from would-be buyers rose in April at the slowest pace in almost a year.

"Some easing in mortgage activity levels is not surprising as the boost to confidence from the interest rate cut last August is fading, while affordability conditions for prospective buyers remain difficult, particularly for first-time buyers."

But few analysts are predicting a UK house price crash yet.

Global Insight's Mr Archer commented: "We expect house prices to ease back into an extended period of relatively modest rises over the coming months."

Rics' Mr Khatri agreed: "With the economy likely to grow at or above trend in 2006, Rics expects housing demand to stay well supported."

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