Housing market crash nearing end?

Economists have claimed that the crumbling housing market is on the brink of turning the corner, having almost reached rock bottom.

After two years of misery for the industry which has seen business plummet for thousands of estate agents, finance chiefs have claimed that house prices will only fall a small amount before beginning the long climb back.

The Centre for Economics and Business Research (CEBR) says that house prices will drop just 10% more before the bottom of the dramatic downturn is finally reached.

With a raft of new measures being introduced by the Government and the Bank of England to help revive the economy, lenders are beginning to loosen the purse strings.

As a result, experts at the CEBR said property transactions were likely to begin to rise over the coming months as the combination of low interest rates, lower prices and improving credit conditions enticed buyers back.

February saw the first bit of positive news for the housing industry when the number of mortgage approvals rocketed by nearly 20% to 37,000. The CEBR said that if approvals continue to rise to around 50,000 a month, house prices will fall by only a further 8% to 10%.

Under this calculation, price falls will bottom out by the beginning of 2010, meaning that the predicted decline will be much slower than previously feared.

The CEBR added that if mortgage approvals rose to 60,000 or 70,000 a month, this may be enough to offset rising unemployment, and could lead to house prices bottoming out by late summer.

A spokesperson said: "The last month has seen the first real encouraging data on the housing market for quite some time.

"The Halifax index for the first quarter of this year showed the smallest quarter-on-quarter fall in prices since the first quarter of 2008, which is interesting and a possible sign that prices are starting to bottom out."

However, the group warned that the housing market remained "on a knife edge", with credit conditions likely to remain tough for some time to come.