Several reports from before the spring bank holiday indicated that the housing market was moving strongly upwards after a six-month pause, but housebuilders remain pessimistic about the strength of demand.
Figures from the Nationwide Building Society showed a 1.5% rise in house prices in March, against 0.1% in February. The RICS also saw an upturn in estate agent optimism last month and the Council for Mortgage Lenders reported an increase in mortgage lending from £6.1bn in January to £6.4bn in February.
But Bovis Homes chief executive Malcolm Harris warned against excessive exuberance about the housing market. "Every time we get an improvement, something seems to happen," he said. "This time it could be the war in Yugoslavia. You don't commit yourself to spending thousands of pounds when bombs are falling." Harris said he was sticking to his prediction that house price rises would be 3-4% this year, despite the leap in March.
Leslie Kent of Seymour Pierce thought that the Kosovo crisis had yet to make an impact on consumers, but warned that a protracted war in the Balkans would be a very different matter.
Shadow chancellor Francis Maude has also warned that the Kosovo crisis could throw chancellor Gordon Brown's ambitious spending plans into chaos.
Persimmon deputy chairman Mike Allen was downbeat about the prospects for the market, although he was dismissive of the chances of the war being an influencing factor on housebuilding.
"We are expecting house price rises of just above inflation this year," he said. "But I don't think the war in Yugoslavia will have a big impact on buying decisions. It is pretty remote to most people buying a house." Allen did note that house sales had picked up since the end of last year, adding that: "We expect this to continue as the euro continues to push interest rates down and boosts the affordability of housing in the UK. But we are not anticipating a house price boom." City analysts are also playing it cool on dinner party talk of an imminent housing market boom. Merrill Lynch said recent figures from housebuilders showed a 5-10% improvement in reservations, but noted that the upper end of the London market was still "a little sticky" as a result of the absence of Asian buyers and City workers' nervousness about their job security.
