Builder calls bottom to house market

The housebuilder Taylor Wimpey said yesterday that it had begun to see "stability" in the slump and that its order book had grown by almost 75 per cent since the start of this year. It is the first house builder to call the bottom of the property market. The news pushed up shares in housebuilders.

Taylor Wimpey's order book stands at £971m, up from £562m in January. The company said new orders had declined sharply in 2007 and last year but that the present level of customer interest meant there was less chance of a "severe downside scenario".

However the more immediate prospects for real estate remain grim. There have been signs from surveys of estate agents that buyer interest has been rekindled and mortgage approvals have nudged up in recent weeks from extremely low levels, but the problem has been converting that interest into mortgages and sales.

The main obstacle to a revival seems to be the unwillingness of banks to lend to first-time buyers. The Bank of England said last week that only about a 10th of 90 per cent-plus loan-to-value mortgages were available compared with last year, but the number had increased slightly in May.

Prices, according to the Nationwide and Halifax indices, rose last month from 1 per cent to 2 per cent; but the thin market makes valuing properties difficult and price movements volatile.

The unanimous view among economists is that there is not enough new money going into housing to sustain prices, let alone to support a rising trend. Most see property values dropping by 10 per cent or more this year.