A double dip? More like a roller coaster

CHRISTOPHER TAYLOR, CHIEF EXECUTIVE OFFICER, LONDON & EUROPEAN

Recent statistics are generating encouraging murmurs about the health of the housing market, although you have to listen pretty hard to detect them.

It’s a bit like a crowd of football fans whispering words of support to their team rather than shouting at the top of their lungs.

According to the Council of Mortgage Lenders at the end of last year there was a surge of first-time buyers rushing to beat the end of the Stamp Duty holiday.

Meanwhile, the Q4 2009 repossession figures – 13% down on the previous quarter and 2% down year-on-year – were not as bad as predicted. The pre-action protocol and low interest rates may be helping but with inflation rising we can’t be sure how long for.

There is still widespread and significant negative equity in the market. Low interest rates are a saving grace, allowing developers to service loans that in many cases far exceed the value of the assets against which they are drawn.

But while some banks have allowed for impairments there is a reluctance to call it a day and take losses on to their balance sheets.

Of course, we can hope for recovery in some values and it’s clear there is still demand for prime commercial properties.

But there will come a time when it’s no longer possible to extend deals. When losses go on to banks’ balance sheets capital provision may be affected and another clampdown on lending could be the result. Double dip? A roller coaster ride, more like.