Mortgage lenders and real estate agencies have just released their latest data on the UK housing market. The data show some contradictory results, but analysts seem to be optimistic that things will get better in the housing market.
The latest survey by the Rightmove website for a property agency shows that property prices are on the rise again. In February, they said that the average price of a house went up by the most in two years. The average asking price for a house in England and Wales is now GBP201,600.
Rightmove blamed the record asking prices on a lack of sellers and rising demand, especially the return of buyers at the lower end of the market, which should have an effect further up the property ladder.
Miles Shipside, the commercial director of Rightmove, sounded a note of caution, saying, "Sellers shouldn't get too ambitious, or the recovery could lose steam because people's budgets are being stretched again."
The Rightmove data seems to contradict the recent FT House price index, which says that "the recovery of house prices since the fall has been very slow and did not pick up speed at the beginning of 2006." The FT also said that two other sets of data about secured loans that came out around the same time "showed that mortgage lending in January was down from the previous month but up from January of last year."
The FT house price index shows that the market isn't as strong as the numbers from Rightmove or Halifax and Nationwide, which are both lenders. The FT thinks that their numbers, which are based on data from the Land Registry, are a good reflection of the market, while the numbers from the lenders change "in ways that are very unlikely to reflect reality."
Many people who are seeing a slow rise in the market are hoping that the government will take action through the Bank of England in the future to boost sales. Howard Archer, the chief UK economist at the financial analyst firm Global Insight, thinks that there will be a cut in interest rates at the beginning of 2006. The mortgage comparison site Moneynet thinks that a cut in the base interest rate by the Bank of England, which is widely expected, will give the housing market "a shot in the arm" because many people will be looking for the right mortgage package to help them get on the housing ladder.
Ray Boulger, an independent mortgage adviser at John Charcol, thinks that a cut in interest rates that will help the housing market is likely. "I think the base rate will go down by at least two-quarter points this year, and house prices will go up by about 5.5 percent."
The latest numbers from the Council of Mortgage Lenders show mixed results. Gross mortgage lending in January was up 32% from January 2005, when it was GBP17.4bn, but it was down from December when it was at a high of GBP26.9bn.
Even though recent reports seem to show results that are contradictory and not clear, Howard Archer said, "Even though mortgage lending slowed down a bit in January, according to the British Banking Association, December was a very strong month. Overall, the data show a clear improvement in the housing market. The latest report from Rightmove backs this up."
