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Property prices fall as lending plunges

Mortgage lending fell by £1bn and house prices slid at the start of June, prompting predictions that a slowdown in the market has started.

The Council of Mortgage Lenders says gross lending fell from £24.8bn in April to £23.8bn in May.

Director general Michael Coogan says the data suggests that the housing market may have started to slow down.

Coogan says: “No one is suggesting that the housing market is risk-free but our central forecast and the strongest likelihood remains that house price inflation will fall back to more sustainable levels in the medium term.”

Figures from the Building Societies Association show that net advances and app-rovals were both down in May compared with April.

Director general Adrian Coles says the BSA is expecting a general slowdown over the rest of the year and possible increases in interest rates.

The Rightmove house price index shows that house prices fell in the first week of June, the only weekly fall in prices so far this year. Average asking prices across the country fell by 0.4 per cent between June 6 and 12.

Commercial director Mike Shipside says the slowdown was starting in London and spreading out, with the Southeast, Wales, the North-west and West Midlands also experiencing a small decline.

He says: “Close analysis provides evidence that the market may have turned. The impact of four interest rate rises, including two on the bounce in April and May, is beginning to bite. The drop may not be huge but if it is a sign of what is to come, it could be very significant.”

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