There are further indications that the property market has stabilised, with news that mortgage lending increased in February - though remaining at low levels.
More home loans
The number of home loans rose in February, supporting 24,300 house purchases, compared to 23,400 the month before. However, the total value of the loans remained unchanged, showing that average house prices are continuing to fall. The number of loans approved rose by 4%, but remains at only about a third of average levels for the month of February over previous years, says the Council for Mortgage Lenders.
Remortgaging is in steady decline, with borrowers typically unable to obtain new loans on better terms than lenders' standard variable rates. The number of remortgages in February dropped by 20% from January - down to 35,000 from 44,000.
There are also problems for those remortgaging properties and first time buyers in meeting lenders' increasingly demanding criteria for minimum levels of equity. Many people on existing mortgages are now in negative equity or have little equity left in the property, while first times buyers must now on average find a 25% deposit.
Activity remains low
Michael Coogan, CML director general, says: "These figures represent February mortgage completions. Recent mortgage approvals figures published by the Bank of England show some signs of improvement at the beginning of the borrowing process, although activity is at a very low level historically. We are not convinced that underlying trends have shifted sufficiently to change our forecasts for mortgage market activity in 2009, but there are some positive signs for later in the year."
The reasonably positive news from the CML appears to confirm the trend evidence from the last three months' house price indices from Halifax and Nationwide. Halifax's figures show a fall in average prices of 1.9% in March, 2.3% in February and a 1.9% increase in January, producing a quarterly price fall of 2.7% - much lower than the 5% plus that was typical for each quarter last year.
Nationwide's index reported a 0.9% average house price rise in March, following falls of 1.8% in February and 1.3% in January. Even if the overall trend remains downward, it is clear that there has been a levelling-off in prices in the last three months. This is especially true in Northern Ireland, where there are the first signs of reductions in the rate of price falls, after average house values fell by nearly a third in the last year.
2006 prices
The lenders' figures were echoed by those of economic analysts Acadametrics, in its FTHPI index. Its chairman, Dr Peter Williams, says: "The average house price is now £200,086, back to the March 2006 level, three years ago. More positively, the FTHPI index suggests that the rate at which prices are falling is slowing.
"In this downturn, November 2008 recorded the highest monthly drop at -2.2%. Since then, the rate of decline has eased almost every month, with March 2009 at -0.9%. This is also true on a three month rolling basis, down from -1.9% to -0.9%."
These trends were further confirmed in the latest market report from the Royal Institution of Chartered Surveyors. This found that new buyer enquiries rose for a fifth successive month, leading to increases in newly agreed sales and expectations by surveyors of further sales. There was improvement in the ratio of sales against stock held and a fall in the number of properties available for sale. Most surveyors still expect prices to continue to fall, but the proportion expecting further falls is reducing.
Buyer interest is up
"Buyer interest is starting to gain real momentum, but will remain frustrated while mortgage finance is scarce," says RICS spokesman Ian Perry. "Surveyors are optimistic that transaction levels will increase, especially for those with the finance to purchase family homes. However, accessibility for first time buyers is likely to remain difficult while loan-to-value ratios generally remain at current levels. The market is still in a fragile state, but with demand continuing to pick up, there may be more signs of stabilisation in the coming months."
The Centre for Economics and Business Research has been one of the most pessimistic commentators, having predicted the severe property price fall. But even it now believes that house prices are fairly near to bottoming-out. Its prediction for the summer is that transactions will rise and that prices are within 10% of their lowest point.
On a knife-edge
Ben Read, CEBR's managing economist, says: "The reality is that the housing market is on a knife-edge. Despite the banking bail-outs and the onset of quantitative easing bringing slow but steady improvements, credit conditions will remain relatively tough for some time. But with base rates at an all-time low, even a relatively modest rise in mortgage approvals to, say, 60,000-70,000 per month may be enough to offset the impact of the meagre wage settlements and rapidly rising unemployment that will continue to unfold over the course of the year, and could lead to house prices bottoming out by the third quarter of this year."
As Read suggests, conditions in the wider economy and the housing market are likely to be tough for some time to come. The housing market is easing, but a full-scale recovery is likely to be some way off.