With the gloomy news that the economy remained in recession during the third quarter of the year, it is not surprising that any faintly positive signals are being eagerly grasped by policymakers and commentators alike
Reflecting this, it is understandable that the recent pick-up in house prices has generally been viewed in a favourable light.
Yet it is hard not to have some concerns that the Nationwide Building Society index now indicates that the market is only 13% away from the all-time high of autumn 2007.
In previous columns, we have reviewed the arguments underlying the latest upward trend in house prices. The latest RICS housing survey suggests these influences still remain in place.
Demand is continuing to edge upwards. New-buyer enquiries show another month-on-month gain. Meanwhile, although the number of new instructions is increasing, it is not sufficient to keep pace with buyer interest.
This is not only showing through higher prices and sales volumes — although the latter still remain well down on historic levels — but also into increasing optimism about the future. Both price and sales expectations continue to move further into positive territory.
Despite this, mortgage finance is still a key issue for the market. Net secured lending rose by just £2bn in the third quarter of the year. Although this is slightly up on the £1.7bn lent in the second quarter, it is way down on both the £5bn provided in the third quarter of last year and the £28bn in the equivalent three months of 2007. Alongside this is the problem of a lack of development finance, which is at least part of the reason why private sector housing starts are so low.
Errors in the second-quarter data have revealed that the actual number of private sector home starts was a meagre 17,500 - just 40% of the total achieved in the early part of 2006. Moreover, the recently released RICS construction survey suggests that workloads in this area are unlikely to have risen very much, if at all, over the latest quarter.
This indicates there is little immediate prospect of any closing of the imbalance between demand and supply through fresh stock — all of which reinforces the prospect of further house price gains in the near term.