We have seen a few hopeful voices raised this week that the slump in the housing market may be about to bottom out.
Warners, the biggest volume conveyancer in Edinburgh, reported a doubling of sales in March compared with January and February; the GSPC released figures showing that the decline in prices in west central Scotland has slowed; and the UK-wide Nationwide monthly average price figures even managed to record a small rise in March. (No such optimism from the Halifax figures out today, however: a 1.9% decline on February.)
We have been here before. The Nationwide has reported the occasional glimmer of good news, but the overall graph shows a relentless downward track. And solicitors and estate agents alike will know that the future trend in prices depends on those unpredictable twins, supply and demand, whose future behaviour is doubly hard to call at present.
I would hazard a guess that the pair are rather playing cat and mouse at the moment. Prospective buyers who can do so, will hold off to see if prices come down further; hopeful sellers already sitting on a fall in market value may well hold on to see if the tide turns. If there is any sign of a real upswing, buyers may be tempted to take the plunge rather than risk losing out, perhaps fuelling a mini-boom which will bring out more sellers so that an equilibrium is reached at a somewhat higher level than at present, if not at the prices seen a year or more ago.
Of course intending buyers and sellers are often the same people, complicating the psychological equation. Much may therefore turn on whether enough can be done to help first time buyers take the plunge, and all initiatives in this respect should be encouraged. Other measures could help too. A solicitor quoted in the March Journal suggested that social landlords should buy up lower priced flats on the market as an alternative to new build. It might not help the construction industry, but it would be likely to have the same ripple effect in triggering more transactions higher up the ladder.
I am sure we will not see a return to the fevered state of the market in late 2007 (I doubt it would be healthy if we did), but a pickup of activity at whatever price level would go a long way to restoring a bit of confidence. Warners reckoned that the crucial factor in getting a deal through was people having realistic expectations of what their properties are worth. Hopefully they will also realise that the property they might buy when they sell, will be similarly discounted and therefore probably as affordable to them as before. Can we educate the market to think that way, and help generate a bit more activity in the economy?