Is the house price crash over?
Recent figures from the British Bankers' Association show mortgage approvals reached a 15-month high in June 2009, while statistics from Nationwide building society show house prices rose 1.3% in July. So, are things really starting to look rosier in the property market?
Over the past year, many front pages have featured bleak stories about negative equity, restricted mortgage lending and a house price 'crash' that might last years.
However, if you've been hoping for an upturn in the property market, perhaps some of July's news cheered your spirits.
Both the Council of Mortgage Lenders (CML) and the British Bankers' Association (BBA) released positive-looking statistics on mortgage lending, while Nationwide building society released encouraging house prices data.
But just how rosy is the property market picture painted by last month's numbers? Is the house price crash really over?
In this article, I'll look at both sides of the story.
The good news…
Among the cheeriest news for property optimists in July was the CML's announcement that mortgage lending rose by an impressive 17% in June 2009.
In total, £12.3bn was lent to home-buyers and remortgagors that month - up from £10.5bn in May.
Just a few days later, the BBA released similar information. According to the association, mortgage approvals hit a 15-month high in June with 35,235 home loans taken out for house purchases.
Perhaps more importantly, this figure was 65% up on the same month a year earlier. This could show a significant uplift in banks' ability (and willingness) to lend new mortgages over the past 12 months.
On 27 July, property intelligence group Hometrack found in its monthly national housing survey that property prices had remained static over the past three months. While no growth in headline house prices had been achieved, Hometrack found that the number of property sellers achieving their original asking prices climbed to 91.5% last month - up from a low of 88.3% in January.
Finally, at the end of the month both the Land Registry and Nationwide released statistics that showed a growth in house prices. According to the land Registry, prices rose by 0.1% in June, while Nationwide claims the average property increased in value by 1.3% during July.
Right now, the opinion that we have reached the bottom of the house prices dip is increasingly popular - and viewed together, statistics like those above may suggest hopes of a housing market recovery are founded on more than vested interests.
The bad news…
On the other hand, there is still enough depressing economic data in the atmosphere to sour even strong optimism.
Key among last month's negative news was the announcement from the Office for National Statistics (ONS) that the UK's gross domestic product (GDP) shrank at a rate of 0.8% in the second quarter of 2009 - more than twice the speed predicted by most economists.
This sounds complicated, but all it really means is that the state of our economy is significantly worse than some of us had begun to believe. In short, a recovery from the current recession may be further away than first thought.
Furthermore, house price pessimists would argue that housing affordability is still too low for a sustained upturn in prices to begin. Historically, when the housing market has been healthy, the price of the average property has been 4.0 times higher than the average annual salary - but in many areas, properties are still being priced at significantly higher income multiples.
A closer look at last month's mortgages data may also reveal a less rosy picture than headline statistics suggest. The report from the CML revealed that, although mortgage lending was up 17% month-on-month in June 2009, it was down a whopping 48% from the level of lending seen in June 2008.
Finally, while Nationwide seems positive about the prospect of overall house price growth in 2009, the Land Registry is not quite so convinced.
Although it reported slight overall increases in property values in June, this was referred to as a flattening out of prices rather than a "return to solid growth".
Penny for my thoughts...
If you've digested all those numbers and facts, perhaps you're thinking the whole situation is about as clear as mud.
If so, I don't blame you: trying to see past conflicting headlines is difficult, and (as I've written before) it's virtually impossible to form an unbiased opinion on the property market.
Personally, I think mortgage lending is still far too restricted to support a sustained house price recovery. The vast majority of mortgages on the market are still for homebuyers with at least a 25% deposit or equity stake - which means many first-time buyers are frozen out from buying property.
I also believe that housing affordability is still too low for property prices to start growing strongly again. Usually, affordability dips below 4.0 during a house price crash, only to recover later on.
Most damning of all for the optimists, in my view, is the state of the wider economy. Unemployment hit its highest level in over a decade last month, and the unexpectedly rapid drop in Britain's GDP during the second quarter of 2009 implies that we could be in recession for longer than originally feared.
But then, I would say that wouldn't I? I'm a renter without a hope of building up enough savings to buy property in the near future - so it's in my interests for house prices to plummet for as long as possible.
If I were a different person, I might say there is a shortage of property in Britain - meaning that, ultimately, the rules of supply and demand must lead to rising prices.
I could also argue - quite convincingly - that we have always been a nation of property lovers, and that the British desire to buy, rather than rent, homes will always drive up their value in the end.
Perhaps I would be right.
As the months roll on, it seems the property market's positive thinkers are finding more and more evidence that we've reached the bottom of the house price bust. And as confidence grows, so will people's willingness to buy homes - in turn helping prices to grow.
Ultimately, what we believe will happen to property prices may have a hand in shaping their future. So: if you really want to know whether the house prices crash is over, it could be that the best person to ask is yourself.
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