Despite lenders introducing tighter conditions, the UK housing market will only see a temporary drop in activity, Bank of England policymaker David Miles has claimed.
Monthly approvals for mortgages have fallen to just below 50,000 since the onset of the financial crisis, this is in comparison to 80,000 to 90,000 seen over the course of the previous ten years.
However, speaking in a presentation to the Home Builders Federation, Mr Miles said that, while requirements for larger mortgage deposits from first-time buyers will lead to low transaction levels in the short-term, the longer-term outlook for the UK property market is more positive.
Real estate values in the country still remain at around 20 per cent below their peak value and Mr Miles noted that they would probably fall further still if the drop in mortgage approvals was believed to be permanent.
In addition to this, he revealed that despite the perception that there has been a sharp increase in the number of Middle Eastern buyers in London, around 70 per cent of clients are UK-based buyers who are looking for investments for long-term growth.