Rays of hope on the housing market horizon

Reasons to be cheerful may have been thin on the ground in the past couple of years but I have noticed some positive signals in the housing market recently.

While everyone in the sector is rightly remaining cautious and no figures taken in isolation should be seen as definitive proof of an upturn, the combined effect of a series of positive news items must be worth at least a half-hearted cheer across the office.

The number of house purchase loans approved in February was average, according to the Bank of England.

The number of loans approved for this purpose hit 37,937 in February – up from the figure seen in January and also up on the average over the previous six months of 31,495.

Although remortgage approvals fell in February to 32,633 – a drop from the previous six-month average of 52,780 – house prices fell by just 0.6% in March, marking the lowest monthly decline for 10 months.

Also, the average time a property is left on the market fell from 12 weeks in February to 11.3 weeks in March. And the percentage of asking price being achieved rose to 88.8% in March compared with 88.3% in the previous month.

While market conditions remain tough and the wider economic outlook is still far from rosy the feedback I’m picking up is that estate agents are marking down prices less aggressively than before Christmas.

Benny Higgins, chief executive of Tesco Personal Finance, said last year that it was only a matter of time before the supermarket branched out into mortgages. Now, Tesco is set to open bank branches in 30 stores by the end of this year.

Tesco bought out the Royal Bank of Scotland from the firms’ joint venture last year, signalling its intention to move into the retail banking market.

The average price of a new home rose by 2.8% in February – the first increase since May 2008. The price hit £227,893 – up 0.6% over the quarter but still 9.6% down compared with the year before.

While two swallows don’t make a spring – even in April – renewed interest from home buyers and investors at the start of this year has put the brakes on the price reductions being made by many developers and resulted in more positive pricing for new homes.

We may not have hit the bottom of the market and it is too early to predict an imminent or sustained turnaround when it comes to house prices, but green shoots are at least beginning to show through.

Of course, the key is improved availability of mortgages with reduced LTV restrictions. This is starting to happen, slowly but surely.

I will have a spring in my step if good news continues to filter through in the next few months.