Green Shoots of Recovery Even If Repossessions are on the Increase

According the company, the prices rose £1500 on average per property in UK last month. This was the fifth rise in the last consecutive months. This may mean that the worst of the market is over.

After a drop of almost 20% since August 207, many of the leading house-price surveys have registered rises in property values in recent months. Based on this optimism, more estate agents now expect the house prices to increase in the coming months than those who do not believe so. Show of this optimism is the first since May 2007.

The commercial director of Rightmove, Mr Miles Shipside said: “There were some fire-sale prices last winter, when a few brave buyers correctly called the bottom of the market. In most parts of the country, prices have consistently improved during spring.”

This has also brought bargain hunters out too. Expecting that the market has bottomed, many investors are out looking for the bargains at basement price levels. So there is an increase in sales and viewing enquiries with estate agents up and down the country.

Mortgage rates are still high which is putting some brakes on recovery. Some observers reckon that if lenders loosened their lending criteria, house prices could actually rise by 5 per cent this year.

However we may still be some time away from full recovery yet. This is because the unemployment is still high. There is also an increase in repossession properties coming to the market. A risk of double dip recession is also real.

This means that the showing of green shoots of recovery may be short lived and prices may still drop further. This may be due to the fact that the earning multiples of an average family is still approximately times to average value of a property. It should be noted that average household income in UK is £25,000 and n average property across the country costs around £150,000.

Putting a positive spin on the possibility of further drop in prices, Rightmove says that it could present a silver lining for buyers. “This would give a further window of opportunity for bargain-hunters who missed out on the best buys last winter,” Rightmove’s house price report said.