Housing market finds some cheer as sales and lending increase

New figures provide fillip but market remains well down on last year

Further signs of recovery in the housing market emerged yesterday as sales rose 40 per cent in March over the previous month and lenders increased mortgage advances, although both remain well down on last year.

Some 60,000 houses and apartments worth at least £40,000 changed hands last month, according to figures released by HM Revenue & Customs. The rise from 43,000 sales in February marked a second consecutive monthly bump. The statistics show that January was the low point for sales, at 41,000, since the onset of the credit crunch.

While signs of green shoots continue to emerge, the mood remains cautious as experts believe the market is stabilising rather than recovering.

This was underlined by bleak year-on-year comparisons: HMRC recorded 83,000 residential sales in March last year. Sales last month were less than half the level of March 2007, when they hit 141,000. The most recent peak was in June 2006, which saw 165,000 transactions in a single month.

The housing market experiences a seasonal bump, HMRC pointed out, with sales generally increasing during the spring. Yesterday's seasonally adjusted figure meant March's rise was up just 13 per cent on February.

There was a similar story in the mortgage lending market, the Council of Mortgage Lenders said. It revealed that lending by banks and building societies hit £11.5bn last month, up 16 per cent on lending in February.

The CML also pointed out that despite the month-on-month rises, March's lending amounted to less than half the sum of the same period last year, when it ran at £24.2bn.

The CML's director general, Michael Coogan, said: "While the market is beginning to show some signs of stabilising, housing transactions and lending are set to remain low for the foreseeable future."

The Bank of England also pointed to reports of growth in inquiries and viewings, as buyer interest increased. "However, any turnaround had come from a low base so that the volume of transactions remained very depressed," it said in its agents' summary of business conditions for April.

The report said: "There was little indication that any pick-up in activity had broadened far beyond investors with substantial liquid assets," adding that first-time buyers were still struggling to find any financing at all.

The latest figures are in line with reports from bodies including the Royal Institute of Chartered Surveyors, which said that "buyer enthusiasm continued to grow" last month. It revealed that potential buyers rose for the fifth month in a row, adding that a stabilisation in prices "may occur" later this year. Halifax also said that house price declines had slowed in the first quarter.