Gross contractor mortgage lending is now at its lowest point since April 2000 according to the latest figures released by the CML. Lending dropped by 12% between April and March and now stands at £10.2 billion. The Council says that the fall was due to the seasonal decline as Easter was in April.

Although there are now more mortgage products available it’s still hard for contractors to purchase a home unless they have can put down a large deposit.

The cuts in public spending that were announced at the beginning of the week are likely to slow down the economic recovery and this will have a knock-on effect as far as the housing market is concerned. However it is expected that interest rates will remain low for the immediate future.

One area that will suffer from government cuts is the Kickstart programme. Kickstart restarts previously pulled private housing projects and the Homes and Communities Agency has already confirmed that £50m of this year’s £420m budget will be chopped and a further £100m will go from low-cost home-ownership schemes.

Kickstart came to life in the last Labour budget and was designed to bolster housebuilders who had stopped construction during the recession. £400m was invested in the project last year with the result that building began on 9,000 new houses. The UK currently has an acute housing shortage and yet in 2009 we saw the lowest total number of homes built since 1923; just 120,000.

Although the coalition does plan to address some housing priorities, it is as yet unclear exactly what form these will take. The support schemes that were introduced during the recession are due to end soon and the repayment date is getting closer. This will leave a funding gap that needs to be addressed, otherwise lending will be curtailed further.

Savills estate agents believe the situation in the housing market has now reached a critical point. There is currently a lack of demand although more properties are being put on the market. They hope that any further decline in the market could be stalled by the welcome abolition of HIPS.

On the down-side, the new rate changes on Capital Gains Tax might act as a deterrent to residential landlords and people wanting to buy a second home.

We will have to wait until the Chancellor delivers the emergency budget on June 22nd to learn the full extent of the cuts and the potential long-term ‘damage’ they could have on the housing market.

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Uncertainty over the outcome of the General Election is still causing potential homebuyers to remain cautious according to research from Hometrack, a Property intelligence company.

Agreed sales dropped sharply in April, down from 13% in March to 6.9%.

Over the last 3 months, there has been an increasing supply of homes on the market but less demand from new buyers. Last month estate agents saw a 1% increase in registrations from potential buyers whilst the number of homes coming onto the market rose by 3.7%. The lack of demand caused house prices to rise by a mere 0.2% in April.

However, year on year figures show an increase of 1.8%, the fastest growth rate for over 2 years.

The research shows that buyers were taking longer to come to a decision and for the 3rd consecutive month, the average number of viewings per sale increased.

It now takes an average of 8.3 weeks to sell a house and sellers can expect to receive 94% of their asking price.

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Gordon Brown believes that house prices in the UK will stabilize as more and more first time buyers try to get their first step on the housing ladder.

The PM was speaking at an event in Cardiff yesterday where he told reporters that there was “a pent-up demand for housing”.

The number of first-time buyers is currently languishing at a 20 year low and the stamp-duty holiday does not seem to have boosted activity in the housing market. No doubt this is due to the large deposits the financial institutions are demanding prior to granting home buyers a contractor mortgage.

GfK’s Financial Research Survey shows that less than one in six first-time purchasers have enough savings to put down the requisite deposit. Interestingly, an increasing amount of first-time contractor mortgages are being granted to people over the age of 50 who are buying properties for their children who cannot break into the housing market.

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Image: Le niveau d’eau / The water level by Marc Lagneau