First upturn in house price index

March 2009 - Nationwide has reported the first increase in house prices for 16 months.

The house price index showed an increase of 0.9% in March 2009 The annual rate of house price falls is now 15.7% This may yet turn out to be an anomaly. In January Halifax showed an increase in house prices, only to be followed in February by a substantial reversal again.

That still puts them average house prices at around five times average earnings which by historical standards is a lot above the average income multiple that prevailed between 1950-1980.

Perhaps a more reliable indicator of the general state of the housing market is the number of loans actually taken out by home buyers. The Bank of England said the number of loans taken rose by 19% in February, with 37,937 loans approved during the month, leading to suggestions that activity in the market may have bottomed out.

Spring traditionally is a very busy time in the housing market and so what happens over the next 2 - 3 months will give a much clearer indication of whether we are nearig the bottom of the housing market, or if this just a flase dawn.