What a difference a few months make- Property prices stabling and interest if not demand rising

It may be difficult to comprehend that only two or three months ago, the UK property market was on such a rapid downward plunge, that no one could realistically predict when it would rock bottom, the only thing that was certain was, that rock bottom it would hit.

Now as spring is with us, signs are that the property slump may be bottoming out and at level much higher than even the most rabid of optimists would have dared to predict. According to a recent survey ordered by the Royal Institution of Chartered Surveyors (Cebr) it now appears that house prices may have only a maximum of 10% further to drop before the property price index market hits the bottom rung.

To add weight to the their findings the Cebr were confident that the recent increase in interest in housing would begin to gradually translate itself in firm sales over the coming months, meaning the end of the slump may soon become a reality.

This positive trend is no doubt strongly influenced by the government incentives to reduce interest rates and improve credit conditions for potential buyers. Now that these buyers are more confident that they won’t be paying highly inflated prices to own their property, it seems nothing more than logical that the housing market will bring their long awaited but still extremely cautious recovery.

Signs that the recovery will be slow but steady is indicated by information issued recently by the Bank of England that mortgage approvals for homebuyers are running at around a third of what they normally are for the same period last year, although approvals jumped by nearly 20% during February 2009..

Cebr estimated that if approvals continued to rise, and succeeded in reaching around 50,000 a month by the August or September, chances are that house prices would only fall by between 8% to 10%.

But the group added that the housing market remained ‘on a knife edge’, with credit conditions likely to remain tough for some time to come.

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Tags: Credit Crunch, Financial News, Mortgage, Mortgages, negative equity, UK Recession