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Market recovering according to CLG statistics

Market recovering according to CLG statistics

Tuesday, 9 June 2009 11:03 AM

Government figures show a possible housing market recovery.

The department for Communities and Local Government (CLG) found house prices were beginning to steady out in their research out today.

The news follows the Royal Institute of Chartered Surveyors (Rics) house price survey out this morning, which also identified 'green shoots', with buyer interest up.

CLG figures found house prices were 13 per cent lower in April 2009 than for the month last year, but house prices fell just three per cent in the quarter to April, compared with nearly four per cent for the quarter ending January 2009.

Good news for first-time buyers (FTBs) came with the news they paid 16 per cent less to get onto the property ladder than a year ago, although there was a small increase in the price paid by FTB's between March and April this year. The average mix-adjusted house price in the UK now stands at £189,215, with the average FTB paying £135,416 in April.

Month on month house prices rose by 1.1 per cent in April according to the CLG, compared with a rise of 0.4 per cent over the period last year.

But speculation as to whether this is the genuine beginnings of a market recovery has been rife, although Nationwide and Halifax figures, which also showed positive signs, have been used to further justify the 'climb back up' for the housing market.

David Smith, senior partner at property consultancy Carter Jonas, warns not to forget the effect of the current political crisis on the housing market. He said: "These latest figures are yet more proof of a stabilisation in the market.

"They reflect not just the increased enquiry levels we are seeing but also the lack of supply, both of which have again been confirmed by the Rics. However, transactions are still low, driven by economic and also political uncertainty. Historically, people hold back in the run-up to a General Election and this will certainly impact housing market activity in the months ahead."

The CLG figures confirmed Northern Ireland as the worst hit in terms of house price falls, where a drop of 22.8 per cent was seen over the last year. Wales fared much better, down 10.3 per cent, with Scotland leading the way down 8.6 per cent. House prices in England fell 13.2 per cent.

Howard Archer, chief UK and European economist at IHS Global Insight: "Despite the recent flurry of improved housing market data and surveys, we remain sceptical that house prices have bottomed out.

"Housing market activity is still very low by past norms and at a level consistent with falling house prices.

"Consequently, we are sticking for now to our forecast that house prices will fall by another 10 per cent from current levels to trough around mid-2010.

"However, we accept that this could turn out to be too pessimistic, particularly if the economy does start to grow in the near term and unemployment rises less than we fear."