"Further signs that the housing market may be stabilising after a torrid twelve months emerged with the release today of the March Nationwide house price index. The first monthly increase in prices since October 2007 comes on the back of Bank of England figures showing a sharp increase in mortgage approvals in February.
"Both of these developments reflect improvements in key series contained in the RICS monthly Housing Market survey. Alongside the pick-up in the 'new buyer enquiries' series since November, there has more recently been a modest upturn in the closely watched sales to stock ratio which has historically been a good lead indicator of price trends.
"That said, while the housing market may now be out of intensive care it remains some way off a return to normality. The rise in mortgage approvals from the depths touched in the latter part of 2007 still leaves the level of mortgage activity way down on anything experienced in previous recessions. Meanwhile, despite the modest increase in prices in March there remains a general expectation that the bottom of the price cycle has yet to be reached. A key issue going forward will be how rising unemployment balances the improvement in housing affordability in driving activity in the marketplace.
"There also remains the issue of first-time buyer accessibility to the market which is unlikely to be resolved in the near term. Penal interest rates on loan to value ratios in excess of 75% will continue to act as an impediment for many potential homebuyers who want to take their first step on the property ladder."
