The number of buyers in London fell 3% to a four year low in the final quarter of 2016 with home lending at its lowest since 1991, the latest mortgage figures show.
The London housing market is being affected by persistent affordability and supply issues with home mover activity in particular on a downward trend, according to the data from the Council of Mortgage Lenders (CML).
Home buyers took out 18,500 loans, down 3% compared to the previous quarter and down 15% on the fourth quarter of 2015 while they borrowed £5.9 billion, down 5% quarter on quarter and down 13% year on year.
First time buyers borrowed £3 billion, down 3% on the third quarter and 4% on the fourth quarter last year. This equated to 11,000 loans, down 2% quarter on quarter and 7% year on year.
Home movers borrowed £2.8 billion, down 8% quarter on quarter and 21% compared to a year ago. This equated to 7,400 loans, down 6% quarter on quarter and down 24% compared to the same quarter in 2015.
Remortgage activity totalled £3.9 billion, down 13% on the third quarter but unchanged compared to the same quarter last year. This came to 13,400 loans, down 8% quarter on quarter but up 2% compared to a year ago.
Home buyers in London borrowed £24.5 billion, down 0.4% on 2015. They took out 75,800 loans, down 7% compared to the year before while first time buyers borrowed £11.9 billon, up 3% on the previous year. This totalled 43,300 loans, down 5% on 2015.
Home movers borrowed £12.5 billion, totalling 32,400 loans, down 3% by value and 10% by volume on 2015 and remortgage activity totalled £16.5bn, up 21% on 2015. This came to 55,500 loans, up 13% in 2015.
‘The number of home buyers in London fell to a four year low in 2016. Home mover activity in particular continues a downward trend, with the fewest loans since 1991. Persisting supply and affordability issues appear to be exerting an ongoing restraint on growth, meaning there is some uncertainty around how the market will perform going into 2017,’ said Paul Smee, CML director general.
‘By contrast, remortgage activity appears to be experiencing a resurgence. Competitive mortgage rates aided by low interest rates have sparked remortgage levels not seen in London since 2008,’ he added.
The data also show that affordability metrics for home movers saw the typical amount borrowed in the fourth quarter was £335,400 in London, down from £336,800 the previous quarter. The average household income of a home mover was £87,300, down from £87,600.
This meant the typical home mover income multiple in London was 3.97, unchanged from the previous quarter but higher than the UK average of 3.29.
