House Price Views Friday, 3rd April 2009

First time since October 2007,the price of a typical house increased in March rising by 0.9% during the month, according to the Nationwide.

There are reasons to be positive about the news.

The indicators suggest that we are now closing in on the bottom for house prices, and murmurings of a recovery are justified.

Overall house prices are no longer falling at any significant level, and if things continue as they are, you can expect to see monthly price rises across the board after the summer.

Behaviour by investors is a good early indicator of market recovery, and we are now seeing a dramatic shift in sentiment. As early as November it could be seen that distressed house prices were reaching their lowest point, which was the first sign of the market reaching the bottom. Cash buyers have been purchasing in volume since then, and we are now suddenly seeing an influx of anxious investors, worried that they may have already missed the best opportunity to enter the market.

And what is more the next big phase will be anxious first-time buyers coming in to the market. Two years ago the average first-time buyer put down a 10% deposit, and there are signs that parents are willing to subsidise deposits if required."

On the other hand na opposing view could be that the reported rise in house prices will not fool anybody who is struggling to sell their home or trying to obtain realistic mortgage finance in the ‘real world’. Sales volumes are currently so low that the monthly house price statistics from any one single lender are virtually meaningless and if you look at Nationwide’s latest quarterly data, it in fact shows a 4% decline on the previous quarter, with the latest annual price recorded to be 15.7% down.

And repossession numbers and ‘real’ house price drops continue to increase daily. Today’s reported price increase could be a statistical blip - there will be little respite for anyone losing their job or needing to sell their home in 2009. Consumers will continue to be conservative about taking on more debt for the foreseeable future, until the economy shows a strong and consistent improvement. No one should delay selling in the hope of price rises, as they are set to fall a further 10 to 15% this year as the credit crunch and unemployment continue to bite.