After the economic turmoil of late 2008, some economists are saying that the green shoots of recovery can now be seen in the housing market. Below are three indicators that the housing market has stopped its descent, and has started to pick up:
1. Mortgage lending jumped in June –
Mortgage lending in June was up sharply on the previous month, with a total £12.3bn in lending, up from £10.5bn. Commentators have put the rise down to a seasonal increase and point to lending still being 48% lower than Jun 2008.
Lending over the past 3 months has been the same as the previous quarter, which was at its lowest level since 2001.
Lending is potentially a good indicator to the state of the economy – after all, the credit crunch, which is seen as a central cause of the economic malaise, is characterized by a unwillingness by banks to lend to people and businesses. If the amount of lending has risen recently, it suggests things are looking up.
2. Buyers are returning to the housing market -
The latest report from RICS shows the number of new buyer enquiries growing at the fastest pace since records began 10 years ago.
The strongest increases were in London & the North, followed by the East & West Midlands.
This increase in buyer enquiries comes as the number of properties for sale falls, being 32% lower than a year ago, meaning that with a shortage of available properties, prices are likely to rise.
Despite buyer enquiries, transactions are still held back by lack of available mortgage funding.
3. House price falls have slowed –
According to the Halifax, house prices fell by just 0.5% in June. In the 3 months to the end of June, house prices fell by 1.9%, the lowest quarterly fall in the first quarter of 2008. The Halifax claims that this provides evidence of confidence returning to the housing market and that the underlying rate of house price falls is easing.
The fall in June meant the annual rate of decline was 15%, down from 16.3% in May.
The Halifax figures contrast with Nationwide, which showed prices rising by 0.9% in June, the third increase in 4 months.
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