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Housing Market News Summer 09 (2)



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Is The Housing Market On The Route To Recovery?

Just read a good blog on The Telegraph website from its economics editor, Edmund Conway (Sorry - the house price crash isn't over yet), reflecting much of our thought on the future of the housing market and house prices.

The blog argues that house price crashes don't show consistent falls in prices - some months will shows rises before further falls. It says that unlike the equity market, the property market takes longer to recover, acting sluggishly and spending a long time at the bottom of its slump before gathering pace and slowly recovering with a property crash usually lasting 5 years.

It also mentions the current low turnover and activity in the housing market that could be giving a false impression of a recovery. Sure, some prices have risen, particularly in London, but from a very small number of sales.

Mortgage Approvals Up 23%

Mortgage approvals jumped 23% in June compared with May's figures, just 6% lower than June 2008.

The Council of Mortgage Lenders' figures show that mortgage approvals was the highest since July last year. The CML seems the mortgage market stabilizing, rather than this being a return to a booming housing market.

The figures also show first-time buyers still being squeezed - the average deposit required by lenders in 2008 was 13% - first time buyers are now having to find a 25% deposit.

RICS Sees Possibility of House Price Rises for 2009

RICS has revised its house price forecast for 2009, now saying that there is a 'possibility' of house prices rising overall in 2009 - its previously forecasted a fall of between 10 - 15% in prices.

It put the revision down to a 'considerable shift' in the housing market, but warned that prices could fall again in 2010 if economic conditions worsened with increases in unemployment playing a large factor.

The housing market still remains in a fragile state, with very low levels of activity. Mortgage lending still remains tight and there is a lack of availability of houses, meaning that demand of short stock is the main driver of recent house price increases.

House Prices Show First Quarterly Rise Since 2007

The latest report from the Halifax shows the first quarterly rise for UK house prices since October 2007.

Prices rose by 0.8% in the 3 months to July. In July, itself, prices rose by 1.1%, but still show a decline of 12.1% on the previous year.

It seems that much of this rise is fueled by high demand and low supply of property.

Housing market activity level is still less than half of what is was in 2007 with mortgage approvals down 58% on June 2007. Experts expect prices to cool off in the autumn when more properties come onto the market.


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