Still looking for the direction through which the housing market will lead the UK out of the recession

Like a giant ocean liner without a rudder trying to navigate a stormy sea, the UK housing market continues to search for the proper direction to take. The problem appears to be that there are too many pilots each pulling the market in a different direction. The UK treasury and the British public are trying to decide if the property market is recovering and the conflicting information flying around is making it very difficult to anyone to decide why way to turn.

According to a recent report from the National Institute of Economic and Social Research (NIESR) the house-price slump U.K.’s will persist until 2012 with a very negative knock-on effect on consumer spending. As long as consumer spending is depressed, so the UK economy will remain depressed with it.

The reason given by NIESR for the decline in home values because the recent gains were driven more by home owners entering the market prematurely on fears of a lack of available property. Statistics show that the number of mortgages issued in the UK for the last quarter remains 65 percent lower than before the financial crisis. NIESR also predict that the UK gross domestic product (GDP) will continue it decline as a result , at least until the final quarter of this year.

Possibly less objective are real estate agents who appear to announce at every opportunity that the residential housing market is in the throes of a major recovery and the only force that is holding it back are the banks who remain reluctant to lend.

The Bank of England said this week that mortgage lending may strengthen in coming months, while Nationwide Building Society says that house prices increased in June. The economy has yet to emerge from recession after contracting the most since 1958 in the first quarter.

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Tags: Bank, British Economy, Economics, Economy, Financial News, Mortgage, Mortgages, Recession, UK Recession