Homeowners and property developers were given encouraging signs recently that the UK’s housing market was recovering. Whilst this remains to be the case in respect to increased mortgage lending and a quarterly increase in national average house prices, there are concerns over what this actually means for the market.

It is all too easy for property owners to look at these signs with unjustified optimism. The UK is only just beginning to emerge from a deep and damaging recession that hit most of the country by surprise.

Although inflation is no longer suffering a negative trend, the consumer price index does not tell the whole story and it is clear with rising unemployment and corporate closures the UK is not yet out of the woods – at least not economically speaking. Thus, recent improvements in the housing market, which may prompt more homeowners to resume investing in their homes, could prove to be misleading in practical terms.

The Ernst & Young Item Club supports this fear by claiming, despite the promising signs of late, property values will take at least another five years to return to their 2007 peaks. In fact, the Item Club has attributed the recent increase of mortgage lending and average house prices to a small percentage of wealthy buyers. More specifically, buyers whose cash wealth is considerably higher than the credit health of average buyers. If the market is being stimulated by a select number of cash happy new homeowners, it is reasonable to suggest that house prices and mortgage lending might slip during the next quarter. Nevertheless, homeowners are advised to push on with substantial home improvement plans in order to invest in the future.

Related posts:

1. Further Evidence of a Housing Market in Recovery? On Tuesday, one of the UK’s leading mortgage lenders announced...
2. Further Glimmers of Hope for Housing Market The Council of Mortgage Lenders announced on Thursday mortgage lending...
3. The Housing Market Slump: a Renter's Paradise? Although the UK economy is showing signs of recovery, the...
4. Mortgage Wars Set to Reanimate Housing Market There have been countless discussions on the global downturn and...
5. What is the Value of an Average Home? According to figures released last week by Nationwide, the average...