Charlie Weston ran a story about an S&P report in the Independent stating that the housing slump is over. The thrust of it is that house prices are reasonable compared with wages and rents but that recovery is still some way off.
There are different interpretations of recovery, some people say stability is recovery or that it can be counted in terms of transactions, personally I think that rising prices is part of the definition, otherwise you simply have stagnation with more transactions which is a dynamic that tends not to last.
Our belief remains as it has for many years, the property market is a boom bust prone area with a cycle that lasts between 18 and 20 years. This leads to structural issues that repeat themselves every time and despite the pattern being known nobody has ever rectified it.
S&P say that reduced mortgage lending is holding the market back, if this is true it is surprising that banks don’t find some way to ramp up lending as it would reduce their capital provision requirements while also improving the condition of loan books with issues.
It goes on to state that there was an increase in lending in Q4 due to mortgage interest ending. That is true in terms of drawdowns, but actual applications are not down (from what we can see yoy) and that may translate into drawdowns which will mean more gross lending in 2013.
The slump is not over in our opinion, not when viewed nationally, however, in the non apartment second hand market we believe the worst is over and we are going back to the usual boom bust, enjoy the ride.