* The UK housing market has been at the sharp end of the recession. Prices have fallen by 18% from the August 2007 peak and the number of transactions is running at half the levels seen before the financial crisis. House building has collapsed. In 2011/12 the number of new homes built fell to the lowest level since 1923.

* Yet despite the decline in prices UK housing still looks pricey relative on a long term basis. The price of an average house in the UK at £172,000 is now 4.5 times annual earnings.

* In Greater London and the South West the ratio is 5.5. The Economist estimates that nationally UK house prices are 21% overvalued relative to rents and 12% overvalued against incomes.

* Some countries have made faster progress in deflating their housing bubbles. In the US, where prices have fallen by 35% from their peaks, the Economist estimates housing is now 7% undervalued against rents and 20% undervalued against incomes. Irish house prices have more than halved from their peaks and the Economists reckons housing there is now slightly undervalued.

* UK housing may not be cheap, but the market is showing signs of life.

* According to the Halifax house prices have risen in each of the last three months and are 1.1% higher than a year ago. The Royal Institute of Chartered Surveyors report that enquiries from new buyers are running at the highest level in 3 years. The number of mortgage arrears has fallen by a quarter since 2009.

* Meanwhile investors see better times ahead for UK house builders. Shares in UK house building companies have more than doubled in value since last June. And in a sign of the changing fortunes of the housing market, the estate agent Countrywide listed successfully on 21st March. Last month the FT reported that the private equity owners of Foxtons, BC Partners, had held talks with bankers about a possible initial public offering of the estate agents.

* Several factors are contributing to improving sentiment about housing.

* Ultra low interest rates and Quantitative Easing have dramatically reduced the cost of borrowing. The Bank of England's survey of lenders shows that mortgages became markedly cheaper in the last six months and are expected to become cheaper still in Q2 2013.

* Homebuyers are also finding it easier to access credit. The Bank of England reports that mortgage availability improved in the first quarter of this year, with the biggest improvement for borrowers taking out high loan to value mortgages. In coming months lenders expect mortgage availability to improve at the fastest rate in three years.

* The government has also trying hard to boost housing activity through a dizzying array of schemes.

* "Funding for Lending", launched last August, aims to increase lending by providing lenders with access to cheap finance.

* "Help to Buy", announced in last month's budget, will partially guarantee the mortgages of people with a deposit of between 5% and 20% buying homes costing up to £600,000. The policy will provide up to £12 billion in guarantees, sufficient to cover lenders against a portion of losses on mortgages worth £130 billion.

* The Chancellor has also expanded the "First Buy" scheme, extending eligibility from first time buyers to all purchasers of new build homes, enabling them to put down a 5% deposit on a property, far less than is required by most lenders, with the scheme supporting a 20% equity loan.

* Yet another scheme, "Buy to Rent", was launched in December to provide £200 million of equity and loan finance to help to house builders realise developments for rent. The March Budget increased funding to £1.0 billion.

* Finally, the Budget increased the discount on sales of council houses under the Right to Buy legislation in London from £75,000 to £100,000 and reduced the qualifying period for eligibility.

* All this made the Daily Express declare, excitedly, in a headline last month, "Perfect conditions for first time home buyers".

* Some worry that this may all stoke a new housing bubble. The Bank of England's new Financial Policy Committee has warned that mortgage lenders are taking an accommodating line with borrowers, allowing them to take payment holidays if they are struggling to keep up with mortgage payments and changing from capital repayment loans to interest only loans to reduce monthly costs.

* UK housing may not be cheap, but history shows that expensive assets can keep on rising in price. And policymakers are certainly throwing a lot of stimulus in the direct of the UK housing market.

MARKETS & NEWS

UK's FTSE 100 ended the week down 2.2% following weaker-than-expected US jobs growth.

Here are some recent news stories that caught our eye as reflecting key economic themes:

KEY THEMES

* The US economy created 88,000 new jobs in March, less than half the number expected by economists
* The eurozone unemployment rate rose to a record high of 12%
* Portugal's constitutional court rejected four out of nine contested austerity measures from the government's 2013 budget, potentially depriving the state of around €900m in net revenues and savings according to estimates
* The S&P 500 and Dow Jones Industrial Average stock exchange indices rose to record highs, surpassing levels last reached in 2007
* Canada provided a £170m loan facility to European telecoms firm Telefónica to help it buy (Ontario-based) BlackBerry products and services and "facilitate BlackBerry market share growth within Telefónica"
* The Italian government approved a measure to pay €40bn of government debts owed to private sector firms in the next 12 months, to improve liquidity in the economy
* Ratings agency Standard & Poor's (S&P) re-affirmed the UK's AAA rating, the only major ratings agency to have done so, but warned that economic growth will likely be slower than expected over the next 3 years
* Moleskine, the Italian maker of diaries and stationary, made its debut on the Borsa Italiana stock exchange, the first new listing in Milan in almost a year
* UK new car registrations rose by a faster than expected 6% in March compared with a year ago, according to the Society of Motor Manufacturers and Traders (SMMT)
* Economic activity in France fell to its lowest level in 4 years according to purchasing managers data from Markit
* Online currency Bitcoin fell 20% in value overnight on Thursday 4th April, following a hacking attack that compromised the operation of one of its major exchanges
* UK construction output contracted for the third consecutive month in March, whilst service sector output grew at its fastest pace for 7 months, according to survey data from Markit/CIPS
* The Japanese central bank announced that it would increase its programme of buying government bonds by 50 trillion yen (£350bn) a year in order to achieve its inflation target of 2%
* The volume of Scotch exported from Britain in 2012 fell by 5%, despite still representing about a quarter of Britain's food and drink exports by value, with sales to France – which imports the most Scotch whisky of any export market – down 25%
* The proposed merger of publishers Penguin and Random House was cleared by the European Commission, allowing the deal to go ahead
* UK supermarkets have imposed restrictions on the purchase of baby milk formula, in response to over-whelming Chinese demand for foreign-made baby milk, following recent safety scandals in the Chinese domestic market
* The US Securities and Exchange Commission gave its permission for companies to use social media websites, such as Twitter and Facebook, to distribute earnings news to shareholders
* Samoa Air has become the world's first airline to introduce a pricing policy which charges passengers, with passengers required to enter their weight along with the weight of their baggage at the time of booking – light aircraft

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