As the future looks brighter for bricks and mortar, where should you place your bets on a recovery?
Jennifer Hill, The Sunday Times – 2 August 2009
The British love affair with bricks and mortar is back as activity picks up and a growing number of analysts believe prices have bottomed out.
Research from Mintel has found that a third of adults believe now is a good time to invest in property and more than half believe property is a good long-term bet — despite the recent crash.
Nationwide building society said last week that the price of the average house rose for the third consecutive month in July, up 1.3% to £158,871. House prices are still 6.2% lower than 12 months ago but that is a sharp improvement on the 9.3% year-on-year decline reported in June.
Meanwhile, the Land Registry index, which is considered a more comprehensive measure than the Nationwide and Halifax indexes, rose in June for the first time since January 2008, albeit by only 0.1%.
In America, the Standard & Poor’s Case-Shiller index, which tracks house prices in 20 US metropolitan areas and is viewed as a general economic indicator, rose 0.5% in the three months to May — its first rise in 34 months of decline.
Activity is picking up, too. Mortgage approvals for British house purchases hit their highest level in more than a year in June, Bank of England data showed last week, while Skipton building society said a 23% rise in activity at Connells, its estate agent subsidiary, helped it notch up profits of £17m in the first half, after a £20.6m loss in the second half of last year.
David Cutter, the chief executive of Skipton, said: “Based on increasingly positive indicators, our house view is that the UK has reached the bottom in terms of house prices.”
Others are less bullish. Seema Shah at Capital Economics, said: “With unemployment rising and average earnings growth so weak, sales volumes will pick up only very slowly this year and next — and not by enough to put a floor under house prices.”
