In the past year, the property market has suffered a big blow as a result of the current financial crisis as lenders became more reluctant to approve mortgages.
According to Benjamin Williamson, of the Centre for Economics and Business Research, lending has remained 'tight' since the economic downturn.
He stated that "Tight lending has been choking the economy since the start of the credit crunch and remains one of the key downward pressures on economic growth."
However, the property industry could be slowly getting back on track as recent figures have revealed that the level of mortgage approvals is beginning to grow.
Mortgage approvals increase
According to figures from The Bank of England (BOE), the number of mortgage approvals saw its second consecutive monthly increase in March.
Statistics revealed that March had the highest level of mortgage approvals since May 2008, with 39,230 home
loan approvals- a rise of four per cent.
Despite the figures from the BoE, according to research from the British Bankers Association (BBA), mortgage approvals for those purchasing a home dropped by seven per cent during March.
Furthermore, research from the BBA found that mortgage lending had fallen in March for the first time in four months.
Mortgage lending drops
Figures from the BBA found that despite an increase in mortgage approvals, mortgage lending had fallen by 25 per cent compared to March 2008.
Statistics also revealed that the gross mortgage lending in March was at its lowest level since April 2001.
According to statistics director David Dooks, of BBA, 'consumer confidence is fragile.'
He said: "Lending to households continues to grow, as banks make funds available for people who meet their lending criteria, but consumer confidence is fragile and unlikely to change demand markedly in the near-term.
"The banks' figures also show it would be unrealistic to expect the mortgage market to recover in a steady and consistent way in the current economic environment."
As a result, property prices could reduce.
House prices expected to fall further
According to Jonathan Loynes at Capital Economics, house prices are expected to fall further this year.
Hometrack, a property intelligence group found that house prices fell at its lowest last month by dropping by 0.3 per cent.
Commenting on the BoE's figures, Loynes said: "The slight rise in the number of new
mortgage approvals from 38,000 to 39,000 in March was a bit better than expected and will fuel recent talk that the housing market has stabilised."
However, he added that there may be 'further sharp falls in house prices,' yet mortgage approvals will 'remain at a level consistent with the reductions'.
Andrew Montlake, of mortgage broker Coreco, said: "The time is ripe for people to start looking for property again to take advantage of low house prices and mortgage rates, but unless you have a substantial deposit this is still proving very difficult."
