It takes more than one swallow to make a summer, as Britons say. But several signs within recent days that the worst may be over for the UK housing market might just do something to improve confidence in this economically beleaguered country.
There will be reversals, of course, and no one believes that these signs mean the end of the downturn in one fell swoop; but might this be the beginning of the end?
Look for example at the number of mortgage products available in the UK for home buyers. According to Mortgage Brain, a website analysing lenders' products, the number of mortgages rose from 2,731 at the start of March to 3,091 by the end. It goes, almost without saying, that such figures are far below those of a year ago let alone back in 2007 when the market was at its peak; but a 13 per cent rise in choice in just one month is good news and suggests that lenders may be lending again.
Similarly the so-called "surprise bounce" in March in the house price index produced by the Nationwide Building Society, one of the best publicised British property measures, is a good sign.
Nationwide says prices rose by an average of 0.9 per cent in March, taking a typical UK residential property from £147,746 (Dh812,304) just back over the psychologically-important £150,000 level. The trend was across the UK, even in areas where prices were still dropping.
So the pace of falls in Northern Ireland, where values have collapsed most, eased slightly in the first three months of the year with prices falling by 4.1 per cent between January and March compared with eight per cent in the final three months of 2008. Prices held up best in south west England, falling by just 2.9 per cent over the three months. House prices in London fell by 5.3 per cent between January and March and the well-heeled south east of England says a 4.5 per cent drop.
Am I foolish enough to say this represents a definite turnaround for the housing market? Of course not; the rival Halifax index for the same period shows a further fall, just to prevent us falling into complacency. But it's a welcome sign after 16 months of Nationwide reporting accelerating price declines that the society says those have slowed or reversed – and even Halifax says the steep falls of the past are now shallower.
Then there is the news that in February (the latest data available) some 37,937 home loans were approved. This figure is up 19 per cent on the January level and a helpful 39 per cent above the November 2008 'low'. This remains far below the 70,000 or more which conventional wisdom says is required to stabilise prices, but again it is a start.
Some newspapers, meanwhile, report that residential landlords are returning to the market. They have set their eyes on new-build properties with discounts of 40 per cent or more – except in those city centres which are over-saturated – and also older properties that can be converted for students to use. Part of the reason, for sure, is that there is nowhere else to buy as shares, gilts and even oil struggle to produce dividends for investors. But again, these landlords have confidence in property.
The final sign refers to the final three months of 2008 during which UK homeowners reduced their mortgages by a record total of £8 billion, using savings to reduce their loans according to Bank of England figures. Equity withdrawals have reduced dramatically over recent years, from a peak of £17.1bn in the final quarter of 2003 to just £6.6bn at the end of 2008. So there is no evidence here that people lose faith in bricks and mortar – far from it, they are putting more money back in.
While it is all too easy to overstate the significance of such data, it is equally too easy to ignore it thinking the doom and gloom we have had for 18 months must continue.
What undoubtedly will not happen will be a full-scale recovery in the UK housing industry while the rest of the economy is still in recession. Unemployment, in particular, will have such a dominant effect on the economic mood that few can realistically assume house prices will go up much before the rest of the economy improves. Yet if confidence rises after such sustained doubt about property, then that will benefit us all.
But we are, perhaps and at last, beginning to see the first signs of recovery. As the sun begins to shine in the UK springtime, optimism might just pop up. And about time, too.
- The writer is a property correspondent with the Observer