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| Is the housing market about to recover? | Is the housing market about to recover? |
| (about 1 hour later) | |
| Analysis By Ian Pollock Personal finance reporter, BBC News A recovery in sales and prices is probably a long way off | Analysis By Ian Pollock Personal finance reporter, BBC News A recovery in sales and prices is probably a long way off |
| The UK's property market has been though the deepest and most sudden slump in living memory. | The UK's property market has been though the deepest and most sudden slump in living memory. |
| House prices are currently down by about 20% from their peak in the summer of 2007. | House prices are currently down by about 20% from their peak in the summer of 2007. |
| First-time buyers now need to put down a whopping 25% deposit if they are to get a mortgage, as lenders ration their loans even more aggressively than before. | |
| Completed sales in the UK during February were half the level seen 12 months before, at just 42,000. | Completed sales in the UK during February were half the level seen 12 months before, at just 42,000. |
| And that was, in turn, just 37% of the level recorded in February 2007, according to figures compiled by HM Revenue & Customs. | And that was, in turn, just 37% of the level recorded in February 2007, according to figures compiled by HM Revenue & Customs. |
| So why does anyone think things may be about to stop getting any worse? | So why does anyone think things may be about to stop getting any worse? |
| House price predictions 2009 Ray Boulger - down 5%Capital Economics - down 20%Nationwide - "prices are still going to fall"Rics - "prices will weaken further" | House price predictions 2009 Ray Boulger - down 5%Capital Economics - down 20%Nationwide - "prices are still going to fall"Rics - "prices will weaken further" |
| One or two estate agents have claimed, in typically excited fashion, that things are about to pick up. | One or two estate agents have claimed, in typically excited fashion, that things are about to pick up. |
| "Sales jump shows confidence is returning" shouted the National Association of Estate Agents (NAEA) last month. | "Sales jump shows confidence is returning" shouted the National Association of Estate Agents (NAEA) last month. |
| And some seasoned observers agree there are reasons to be cautiously optimistic, if not actually cheerful. | And some seasoned observers agree there are reasons to be cautiously optimistic, if not actually cheerful. |
| "There are increasing amounts of anecdotal evidence that things are getting less bad," says Ray Boulger of the mortgage brokers John Charcol. | "There are increasing amounts of anecdotal evidence that things are getting less bad," says Ray Boulger of the mortgage brokers John Charcol. |
| "We have passed the nadir in terms of activity." | "We have passed the nadir in terms of activity." |
| Fresh interest | Fresh interest |
| So, what is the evidence? | So, what is the evidence? |
| These things may look like small beer but we are pointing in the right direction now Simon Rubinsohn, Rics | These things may look like small beer but we are pointing in the right direction now Simon Rubinsohn, Rics |
| A key indicator of activity, if not prices, comes each month from the Bank of England. | A key indicator of activity, if not prices, comes each month from the Bank of England. |
| It adds up just how many new mortgage loans have been agreed in principle by lenders, but not yet lent. | It adds up just how many new mortgage loans have been agreed in principle by lenders, but not yet lent. |
| Known as mortgage approvals, they are widely regarded as a reliable indicator of near-term trends. | Known as mortgage approvals, they are widely regarded as a reliable indicator of near-term trends. |
| And in February they jumped to 37,0000, after hovering around the 31,000 level for the previous six months. | And in February they jumped to 37,0000, after hovering around the 31,000 level for the previous six months. |
| Meanwhile, estate agents who are members of the Royal Institution of Chartered Surveyors (Rics) reported last week that new inquiries from potential buyers had gone up for the fifth month in a row. | Meanwhile, estate agents who are members of the Royal Institution of Chartered Surveyors (Rics) reported last week that new inquiries from potential buyers had gone up for the fifth month in a row. |
| Simon Rubinsohn, chief economist at Rics, suggests that the increase in inquiries has filtered through into more approvals, though he believes it will be a long time before the market returns to anything resembling normality. | Simon Rubinsohn, chief economist at Rics, suggests that the increase in inquiries has filtered through into more approvals, though he believes it will be a long time before the market returns to anything resembling normality. |
| "I suspect inquiries will increase in the next few months - activity will build up but remain at a low level," he says. | "I suspect inquiries will increase in the next few months - activity will build up but remain at a low level," he says. |
| "These things may look like small beer but we are pointing in the right direction now," he adds. | "These things may look like small beer but we are pointing in the right direction now," he adds. |
| Scepticism | Scepticism |
| Plenty of other commentators are pretty sceptical that the market has reached any sort of a turning point. | Plenty of other commentators are pretty sceptical that the market has reached any sort of a turning point. |
| How much further will prices fall? | How much further will prices fall? |
| "The evidence suggests activity is picking up - though some reports are overdone," says Ed Stansfield of the economic consultancy Capital Economics. | "The evidence suggests activity is picking up - though some reports are overdone," says Ed Stansfield of the economic consultancy Capital Economics. |
| "The recovery is miniscule compared to the drop," he warns. | "The recovery is miniscule compared to the drop," he warns. |
| Sue Anderson at the Council of Mortgage Lenders (CML) is equally reluctant to suggest the market is turning. | Sue Anderson at the Council of Mortgage Lenders (CML) is equally reluctant to suggest the market is turning. |
| "People are desperately looking for some "green shoots" but we are in the very cautious camp - it is all from a very low base," she says. | "People are desperately looking for some "green shoots" but we are in the very cautious camp - it is all from a very low base," she says. |
| "There are some indicators showing a slightly more positive picture - but we would want to see months of this before being certain of a turn in the market," she adds. | "There are some indicators showing a slightly more positive picture - but we would want to see months of this before being certain of a turn in the market," she adds. |
| Last week the CML pointed out that about two million households cannot sell and move, either because they are in negative equity, or have too little equity in their homes to provide the funds for a deposit on their next purchase. | Last week the CML pointed out that about two million households cannot sell and move, either because they are in negative equity, or have too little equity in their homes to provide the funds for a deposit on their next purchase. |
| Falling prices | Falling prices |
| Prices are the key indicator for most people and they are still falling. | Prices are the key indicator for most people and they are still falling. |
| According to the Nationwide Building Society, prices in the first three months of the year were 4% lower than in the previous three months. | According to the Nationwide Building Society, prices in the first three months of the year were 4% lower than in the previous three months. |
| That was another large fall, but not quite as fast as seen in most of the second half of last year. | That was another large fall, but not quite as fast as seen in most of the second half of last year. |
| And the Halifax says prices fell by 2.7% in the past quarter, compared to falls of between 5% and 6% in each of the previous three quarters. | And the Halifax says prices fell by 2.7% in the past quarter, compared to falls of between 5% and 6% in each of the previous three quarters. |
| Neither lender is reading too much into this yet. | Neither lender is reading too much into this yet. |
| "There are some signs the rate of decline may be easing," says the Halifax's chief economist Martin Ellis. | "There are some signs the rate of decline may be easing," says the Halifax's chief economist Martin Ellis. |
| "I wouldn't want to overstate it. There are some tentative signs but it's a long way from seeing prices stabilise," he adds. | "I wouldn't want to overstate it. There are some tentative signs but it's a long way from seeing prices stabilise," he adds. |
| His counterpart at the Nationwide, Fionnuala Earley is equally cagey. | His counterpart at the Nationwide, Fionnuala Earley is equally cagey. |
| "Prices are still going to fall this year because the economy is not in great shape," she says. | "Prices are still going to fall this year because the economy is not in great shape," she says. |
| "Sales will improve but at lower levels and we may have to wait until 2010 before seeing anything significant," she adds. | "Sales will improve but at lower levels and we may have to wait until 2010 before seeing anything significant," she adds. |
| Deepening recession | Deepening recession |
| What is deterring any of these experts from being more optimistic is the state of the economy. | What is deterring any of these experts from being more optimistic is the state of the economy. |
| There is no way on earth the 'green shoots' mean anything Jonathan Davis | There is no way on earth the 'green shoots' mean anything Jonathan Davis |
| It is still shrinking fast and, crucially, unemployment is rocketing. | It is still shrinking fast and, crucially, unemployment is rocketing. |
| "The rise in unemployment is still coming through and the impact of arrears and distress sales will keep a downward pressure on prices," says Ed Stansfield. | "The rise in unemployment is still coming through and the impact of arrears and distress sales will keep a downward pressure on prices," says Ed Stansfield. |
| Simon Rubinsohn at Rics suggests the effect of rising dole queues may not be so dramatic, and argues that government measures are already stopping the market from being flooded by re-possessed homes. | Simon Rubinsohn at Rics suggests the effect of rising dole queues may not be so dramatic, and argues that government measures are already stopping the market from being flooded by re-possessed homes. |
| "Government schemes to discourage repossessions are playing a role, rhetoric aimed at lenders is having the same effect, as is government ownership of several lenders," he says. | "Government schemes to discourage repossessions are playing a role, rhetoric aimed at lenders is having the same effect, as is government ownership of several lenders," he says. |
| But even suggesting that things may be about to get better draws a hollow laugh from Jonathan Davis, a chartered financial planner who predicted for a long time that the housing market would implode. | But even suggesting that things may be about to get better draws a hollow laugh from Jonathan Davis, a chartered financial planner who predicted for a long time that the housing market would implode. |
| He derides the idea of any imminent recovery in the midst of a recession and the worst world-wide financial crisis for 100 years. | He derides the idea of any imminent recovery in the midst of a recession and the worst world-wide financial crisis for 100 years. |
| "One and a half million extra unemployed? 25% deposits for first time buyers? Lending restrictions? - there is no way on earth the 'green shoots' mean anything," he says. | "One and a half million extra unemployed? 25% deposits for first time buyers? Lending restrictions? - there is no way on earth the 'green shoots' mean anything," he says. |
| "The trend is still down, but for the odd statistical blip in occasional months," he says firmly. | "The trend is still down, but for the odd statistical blip in occasional months," he says firmly. |
| Predictions | Predictions |
| So where are prices heading? | So where are prices heading? |
| Even if the economy was not shrinking, prices would still be hindered by the lack of mortgage funds and the consequent choking of sales. | Even if the economy was not shrinking, prices would still be hindered by the lack of mortgage funds and the consequent choking of sales. |
| Several of our commentators gave up making price predictions at the end of last year, citing the inherent unpredictability of the market. | Several of our commentators gave up making price predictions at the end of last year, citing the inherent unpredictability of the market. |
| But for those bold enough to have a go, the outlook has not changed much in the past few months. | But for those bold enough to have a go, the outlook has not changed much in the past few months. |
| "Prices will weaken further over the next three or six months," says Simon Rubinsohn of Rics. | "Prices will weaken further over the next three or six months," says Simon Rubinsohn of Rics. |
| A few experts are happy to be more specific. | A few experts are happy to be more specific. |
| • Ray Boulger - "a fall of 5% this calendar year." | • Ray Boulger - "a fall of 5% this calendar year." |
| • Ed Stansfield - "down 20% this year and 10% next year." | • Ed Stansfield - "down 20% this year and 10% next year." |
| • Jonathan Davis - "a 40% drop from September 2007 to the end of 2010 or 2011." | • Jonathan Davis - "a 40% drop from September 2007 to the end of 2010 or 2011." |