This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/8253017.stm

The article has changed 6 times. There is an RSS feed of changes available.

Version 1 Version 2
'False dawn' in UK housing market 'False dawn' in UK housing market
(8 minutes later)
An economics forecasting group has said that the recent rise in UK house prices is a "false dawn".An economics forecasting group has said that the recent rise in UK house prices is a "false dawn".
The Ernst & Young Item Club also says that property values will not return to their 2007 peak for at least another five years.The Ernst & Young Item Club also says that property values will not return to their 2007 peak for at least another five years.
It says "a small number of cash-rich buyers have supported prices".It says "a small number of cash-rich buyers have supported prices".
"The supply of these funds is limited, which means prices are likely to dip again in the first half of next year," said the body's Hetal Mehta."The supply of these funds is limited, which means prices are likely to dip again in the first half of next year," said the body's Hetal Mehta.
The Item Club said that price rises were largely down to the acute shortage of available properties, with many homeowners either trapped in negative equity or reluctant to sell for fear of having to absorb the losses of the past two years. The Item Club is the latest commentator to argue that recent upturn in prices reflects an unusual position in the market that is unlikely to last.
It says points out that many homeowners are either trapped in negative equity or reluctant to sell for fear of having to absorb the losses of the past two years.
'Tough lending criteria''Tough lending criteria'
It also said that 56% of homeowners had a mortgage, meaning that any sustained recovery would have to be underpinned by a recovery in mortgage lending. The sharp downturn in prices that started in 2007 seems to have come to an end this year, though whether or not prices are actually rising again is a matter of debate.
However it said that banks were still being restrictive about the amount of money they were lending. The Nationwide building society has said that UK house prices are £7,000 higher than the start of the year, while its big rival lender the Halifax says prices are in fact roughly the same.
"The scarcity of mortgage supply and tough lending criteria is making it particularly difficult for first time buyers to enter the market." the Item Club said. The ITEM Club argued that as 56% of homeowners have a mortgage, any sustained recovery would have to be underpinned by a recovery in mortgage lending.
"Given that they typically purchase cheaper properties, this will have significant implications for those looking to trade up, clogging up the market and limiting the number of transactions taking place." However banks were still being restrictive about the amount of money they were lending.
"The scarcity of mortgage supply and tough lending criteria is making it particularly difficult for first time buyers to enter the market," the Item Club said.
"Given that they typically purchase cheaper properties, this will have significant implications for those looking to trade up, clogging up the market and limiting the number of transactions taking place," it added
And it warned that the threat of unemployment was also likely to cause people to delay making big financial decisions, such as buying a house.And it warned that the threat of unemployment was also likely to cause people to delay making big financial decisions, such as buying a house.
Last week a report from the Halifax said house prices rose by 0.8% in August compared with July - the second monthly rise in a row according to its figures.
But the average interest rate on a deal for a borrower offering a 25% deposit rose from 5.68% to 5.72% in August.