House Prices and Credit Availability, London Mortgage Broker, London Mortgage Advice. Wednesday, 29th April 2009

After tumbling for every month since October 2007, British homeowners were treated to a rare respite on Thursday. House prices finally rose, albeit by a tiny amount, in March, according to data by the Nationwide thrift. Based on the Bank of England's latest survey, there could be more good news around the corner.

The price of a typical house, yhe Nationwide figures showed, that increased by 0.9%, slowing the annual rate of decline from 17.6% to 15.7% and making the average home worth 150,946 pounds ($221,580).

In addition and not least the survey also showed mortgage approvals rose in March, up 5,000 to 37,900, their highest level in nearly a year. The news follows months of aggressive interest rate cutting by the Bank of England, which has reduced the base rate to 0.5%. In March, the Bank went further, instigating a quantitative easing policy in a bid to get credit flowing.

The data shouldn't be taken as evidence that the bottom had finally been reached, according to Fionnuala Earley, chief economist with Nationwide."The current upturn in activity is more likely to reflect the return of buyers who have delayed purchasing through the worst of the financial turbulence," she said. "These are only month- on-month figures and it is wise not to get too excited about them in the general trend of things. I wouldn’t suggest that we are seeing green shoots yet."

Following on form this news is the possibility of more good news to come. Also on Thursday, the Bank of England said it expected credit conditions to improve over the next three months, as its quarterly survey found that a narrow majority of lenders said they expected a small increase in credit availability in that period. The drying up of credit has been a big force behind the plummet in the housing market. "Improvements in the cost and availability of funds were expected to support increased credit availability over the next three months," said the central bank.

The Bank of England's survey suggests that the various policy measures taken by the central bank and government to boost lending were finally beginning to have an impact. according to IHS Global Insight economist Howard Archer, "It raises hopes that credit conditions will increasingly become less of a constraint on economic activity over the coming months."