Julian Knight: So house prices are up? Well, not in the real world

Yet again last week my inbox was full of emails from estate agents (usually London-based) crowing that the housing market has "turned the corner" – all off the back of the latest figures from Nationwide showing that prices actually rose during the last quarter.

Now, quarterly figures do matter – unlike monthly ones which are too prone to seasonal and one-off distortions – and, yes, there seems to be some sort of equilibrium returning after the biggest falls since house prices were properly collated in the early 1980s. But of more significance to me is that the total number of sales is still only around half the level you'd expect to see in even a modestly rising market. What's happening is that supply is restricted because of the welcome action to prevent repossession, and sellers just not wanting to commit themselves to sell at a lower price. Outside the central and west London bubbles, in the real world, the market is experiencing stasis – a freeze.

If you're old enough to remember the late 1970s it's similar to what happened then, when a credit boom had gone pop, sales were sluggish and at best prices bumped along. The key is, though, that there are as many reasons for prices to go down from this frozen point as up. Mortgage finance is still very tight with large deposits required and, crucially, unemployment is rising sharply. Who knows how long the moratorium on repossessions will last if defaults go above expectations. We will see record insolvencies this week. Who is to say that lenders won't revert to type and start grabbing what they can? In fact, one of the few reasons to feel optimistic is itself a negative – in that other asset classes such as savings and shares have been doing badly, which makes property, at least in part, a comparatively attractive investment. But even this is changing now we have seen a modest bull run on shares, so who is to say that investors won't go for equities, not property? This will remove another support to the market. Things may have turned a corner, but it could lead to a dead end.

Dead regulator walking

Ever since the Shadow Chancellor, George Osborne, pronounced a death sentence on the Financial Services Authority a fortnight ago I can almost sense power draining away from the regulator, and its aura – like that of the Australian cricket team – has gone. Speaking to people within the FSA, morale is desperately low; many fear for their jobs as they know that instead of drinking in a last chance saloon the regulator is being measured for its funeral suit by an incoming Tory government. It showed incredible over-sensitivity last week to the report from the Scottish Affairs Committee into the near collapse of the Dunfermline Building Society, denying vehemently that it had failed in its regulatory duty. It reminds me of how, at work, when you see someone who is touchy it usually means they know they are not up to the job. A regulator with a shred of confidence would have taken the report on the chin and put its case more calmly.

There are huge dangers here, though, we have nearly 10 months to an election and then there will be a delay as the FSA is abolished and its replacement set up. But Osborne has also given no real indication what will replace it – OK, the Bank of England will do the number crunching but what teeth and emphasis will the new consumer protection body have?

A few weeks ago in this column I asked Osborne a series of questions, some have been answered but the banks and building societies which try to deploy every trick to fill their coffers, often at the expense of consumers, need a regulator who, in FSA chief Hector Sants' words, they fear.

Comparing comparison sites

The world is not short of price comparison websites. Almost every financial or consumer product seems to have a dedicated site promising better, cheaper, more accurate prices. But with such a rapidly expanding market it's impossible to properly compare the comparison sites. So now we have self regulation, with the Comparison Consortium. Beatthatquote.com (a new one on me) became the first to get accreditation from the Consortium on Friday. To do so, it has agreed to the Consortium's code of practice, which is rather bland, apart from the commitment to give accurate quotes and not mislead the public – a common bugbear with comparison sites. Now, in many fields, self-regulation amounts to little or no regulation, so let's hope that price-comparison websites don't follow the same pattern.