House prices are stabilising, according to the latest key surveys. If this trend continues, it is possible that the collapse forecast for this year may not come to pass. But while property commentators express some relief, they remain cautious about proclaiming that the recovery has arrived. We rate the tone of the surveys from (doomladen) to (happy days are here again).

Hometrack reports that prices were unchanged last month, thanks to “higher sales volumes, a dwindling supply of property for sale and a continued increase in demand”. This survey’s average price is £155,600, 8.7 per cent lower than a year ago. Richard Donnell, of Hometrack, says: “The key risks are a renewed weakening in demand or a surge in the volume of housing for sale.”

Hometrack also provides evidence of the regional mismatch between supply and demand (see table). In London, demand is up 52.2 per cent in the first half of the year, but the number of homes for sale is up only 5.9 per cent. In the North, demand rose 20.3 per cent, but with 21.5 per cent more properties on the market.

Optimism index rating

The Land Registry’s average price for May is £152,497, down 0.2 per cent on April. The annual decline is 15.9 per cent. Luton seems to be hardest hit by the downturn; the average price is 21.8 per cent lower than a year ago. The average price in Merthyr Tydfil, by contrast, has slipped by only 3.6 per cent. But, as the Land Registry says, “the figures are displaying the volatility associated with low volumes.”

Optimism index rating

Nationwide’s average price for June was 0.9 per cent higher at £156,442 — an annual fall of 9.3 per cent. Martin Gahbauer, Nationwide’s chief economist, says: “If the pattern seen in the first half of the year is repeated over the second half, then prices could show only a small single-digit fall for 2009 as a whole.” Gahbauer points out that prices are stabilising despite very low purchase activity. Mortgage approvals have risen from their November low but are still 55 per cent below their long-run average and 33 per cent below the level of the 1990s slump.

Optimism index rating

Capital Economics, which issues assessments of the key data, sees no reasons to be cheerful. Commenting on the Nationwide data, the consultancy says: “House prices are still overvalued, the recovery in activity appears to be wavering, unemployment is set to rise further and credit conditions remain tight.”

Optimism index rating

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