No real recovery.

What's really happening to the UK housing market

Published:  26 May, 2009

UK: Conflicting reports are painting a mixed picture about the state of the the housing market. Are green shoots sprouting? Market analysts are not so sure.


First, there was the Royal Institution of Chartered Surveyors' survey in April, then a report from the National House-Building Council claiming that the decline in housebuilding is stabilising.

The latest report from the NHBC stated that the decline in housebuilding is stabilising, following the first quarter-on-quarter rise in applications to start new homes in almost two years.

Although NHBC figures show that activity levels during the three months to the end of April were still severely depressed – with a 53% reduction in the number of applications received compared to the same period a year ago – some encouragement can be taken from April's figures, it said.

They show applications to start new homes in the combined private and public sectors rose for the fourth successive month in a row to 6379.

However, analyst firm Capital Economics, warned that the housing market has not “turned a corner”, despite the Royal Institution of Chartered Surveyors (RICS) report of a rise in activity in April.

RICS' UK housing market survey revealed that sales in April had edged up, while the net balance of surveyors reporting a rise in new enquires climbed to the highest figure for almost a decade.

The trade body also reported that enquiries in the market increased for the sixth consecutive month, while 41% more chartered surveyors reported a rise than a fall in new buyer enquiries up from 32% in March - the highest figure for almost a decade.

However, in its Housing Market Data Response report, Capital Economics noted that transactions remained at exceptionally low levels and would need to rise significantly before they reached a level that would stabilise prices.

Alan Cleary, managing director of Exact, echoed Capital Economics' cautious outlook. "Housing market commentators would have us believe in green shoots springing up everywhere, but for those in the know, sentiment has not turned yet. House prices cannot recover until the mortgage market is fixed, and that is some way off."

Imtiaz Farookhi, the chief executive of NHBC, said: "While it is still too early to assume that these are definite signs of a recovery, some positive indicators are emerging which suggest that the severe downturn in housebuilding activity may be beginning to turn a corner.

"Anecdotal evidence from housebuilders and developers also suggests that conditions are easing slightly on site, no doubt boosted by the Government's recent £1bn budgetary pledge to help the housing market and the Homes and Communities Agency's (HCA) Kickstart initiative to open up mothballed sites."

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