Outlook: Goodness, it's not just the recession that's coming to an end (see all those reports of green shoots); even the housing market is now poised for recovery, says Taylor Wimpey. We paraphrase, of course, but Britain's biggest housebuilder sounded more optimistic yesterday than at any time since house prices first went into freefall.
Those with a tendency towards cynicism will say that if you're in the housing business, talking up the market's prospects is in your interests. Still, in Taylor Wimpey's defence, it does have some real numbers to back up its accounts of stabilisation, including a sharp increase in its forward orders.
Even so, it is difficult to share the builder's optimism. Not because of suspicions about its motives, but because the fundamentals are heading in the wrong direction.
No one, for example, seriously thinks unemployment is likely to stop rising for at least another year. That means more personal debt, including additional mortgage arrears, greater numbers of distressed sales and an increase in repossessions. None of which will act as a brake on house price falls.
Even discounting that argument – let's assume for a moment that prices have fallen so far that economic fears are now discounted – where are all the buyers going to come from? There may well be people out there who want to buy property. Their ranks may even be swelling. Unfortunately, however, the mortgage finance isn't there for many of them.
The report on lending trends published by the Bank of England on Thursday made that abundantly clear. Just to remind you, it warned there has been almost no increase in the number of mortgages available at higher loans-to-value, and that the cost of home loans is increasing.
No wonder that the Council of Mortgage Lenders' figures show that mortgage lending actually fell back in May compared to the previous month. That reflects lower remortgaging activity, but also the fact that what increases we have seen in mortgage approvals for home purchases recently have been exceptionally modest.
Home loan providers are increasingly risk-averse, which is understandable given their realistic fears about bad debt. Whatever political pressure is brought to bear on lenders, including those with the taxpayer on their share registers, the supply of mortgage finance isn't likely to ease any time soon.
For that reason, it is hard to see any sustained recovery in the housing market for some time yet. The worst of the falls may be over, though plenty of analysts would not even be that optimistic, and we may see the odd month of house price rises (there have already been several, according to Nationwide and Halifax), but the storm has not yet passed over.Reuse content