Making sense of conflicting housing data

The recent data about the housing market is sending us all contradictory messages.

The latest figures from the The British Bankers' Association (BBA) says 31,162 home loans were approved for homebuyers last month, up 7% from April and 15.8% on a year ago.

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This comes on the same day that the Rightmove reported a 0.4% fall in asking prices in June after 4 months of rises.

Prices fell 0.4% this month from May when they rose 2.4%, according to Rightmove, taking the average asking price down by £1,000 to £226,436.

The FT at the weekend reported that the Bank of England does not anticipate increasing interest rates this year and only slightly next year by 1% taking rates to 1.5% by the end of 2010.

This happens at the same time the Nationwide has announced that they are increasing fixed interest rates for the second time in under two weeks.

BONKERS! But what does it mean?

Landlords could be forgiven to be a little confused by all this contradictory data. So what does it mean?

Thankfully, in my view it does means that we are off the bottom of the downturn with these figures indicating that the battle is now on going between the forces of optimisim and pessimism.

To my mind there is no point in talking about recovery because this implies a term and timescale that anticipates a quick and painless return to the heady days of 2007, of boom and easy money. No, we need to adjust to a new paradigm of low growth, high unemployment, difficult lending and low interest rates.

We could boost the economy by voting for a thatcherite free market revolution similar to the 1980s of sweeping public spending cuts but the British electorate have little or no appetite for such harsh medicine. Instead, the UK economy will very very slowly bump alsong the bottom and then upwards in the way the German economy did after the shock of reunification.

All this means that property prices aren't going to bounce back anytime soon.

So landlords need to bunker down and knuckle down and start to plan for the long-term. Along the way they should be prepared for many more sets of conflicting and contradictory sets of data as the forces of optimism and pessisism seek to have their say.

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