Housing market 'could be improving'

29/07/2009

Britain's homeowners struggling with negative equity and making mortgage payments have been given hopeful news by a top property consultancy.

Ducalian said that the housing market could now be on the road to recovery, after months of decline caused by the credit crunch.

Since the onset of the crisis in 2007, it has become harder for householders to remortgage cheaply due to the drying-up of credit on the UK high street.

House prices have marked double-digit percentage price falls over the past year, putting tens of thousands "under water" on their loans.

However, earlier this week the Land Registry said that house prices increased by 0.1 per cent over June.

This is the first time the index has "turned positive" since January 2008.

Timothy Lambert, head of consulting at Ducalian said: "It is increasingly likely based on all reports that we have hit the bottom of the market. However, just because we have hit the bottom does not mean the market will rise."

The expert also said that the market needs "confidence" and "more stock" to return to health.

"UK house prices still appear to be bobbling along at the bottom. We are in the buying season and this may skew the month on month figures," EuroDebt director Kevin Still added.

"Slightly more encouraging are the Bank of England figures which show the number of mortgages approved for house purchases in June rose to 47,584 - up from 44,169 the previous month and the highest number since April 2008. Reports have indicated that banks are protecting their funds and rationing the mortgage advances, which may also be impacting the market where there is genuine demand for new mortgages rather than re-mortgages.

"It still seems to be difficult to release equity to tackle debt problems. This appears to have given more impetus to non-borrowing debt solutions, like Debt Management Plans and IVAs, where there has been a marked rise in homeowners over the last 12 months or so."

Tags; Housing Debt and Bills, Young Family Finances,

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