Officials from the CEBR have predicted that over the coming months property transactions are likely to start increasing, and that this will bring an end to the housing slump. Economists from the group have cited a number of factors that will contribute to a pick up in property transactions. This includes lower property prices, rock bottom interest rates, and the easing of credit conditions, all of which are helping to bring buyers back to the market.
Figures from the Bank of England have shown that during the mo nth of February there was an increase of nearly 20% in mortgage approval levels, with the number of mortgages approved standing at 37,000. This reflects an ease of credit conditions for those seeking mortgages, as well as an increase in interest from buyers, although the figure is still only one third of the level of mortgage approvals one year earlier.
The CEBR has now said house prices may fall by just 8-10% more if mortgage approvals rise to around the 50,000 a month mark by later summer. The rate of decline in relation to house prices is likely to be far slower this year than it was last year, and the CEBR predicts that price falls would begin to bottom out by the start of next year.
However, if mortgage approval levels rise by more than anticipates – such as 60,000 or 70,000 per month – house prices could bottom out much earlier. The CEBR said, however, that it is unlikely that mortgage approvals would shoot up by this level, and that the rise in mortgage approvals was likely to be a far steadier and slower one.
In a recent statement the CEBR said that last month had shown the most encouraging data in relation to the property and mortgage market for some time, and that this was encouraging news for these markets.
10April 2009
