High Street banks saw a new, 16 month low in housing loan approvals in August - increasing fears about a double dip to the UK housing recession. The British Bankers’ Association reported in August, 31,767 new mortgages were sanctioned, down from a few more than 34,000 in July. This represents a significant drop of more than 22 per cent, compared to August of last year.

Howard Archer, economist of IHS Global Insight, commented on government austerity measures kicking in, saying: "Given this backdrop, we suspect that house prices could fall by around 10% between now and the end of 2011. Much will obviously depend on how well the economy holds up as the fiscal squeeze increasingly kicks in, mortgage availability and the amount of houses coming on to the market."

Paul Diggle, Capital Economics property analyst, remarked on other discouraging factors affecting the sector, saying: "They include the fiscal contraction, the slowing pace of the economic recovery and the likelihood of a renewed rise in unemployment, as well as uncertainty over the regulatory and funding environment.

"There is little prospect of a meaningful improvement in mortgage approvals for at least 12 months, but the weak mortgage market could continue for much longer than that."

Diggle believes the market will struggle for some time for good reason. Even with new properties coming on to the market and record low interest rates, the current flavor of the economy and confidence vested in it, says this market will taste bad for months to come.

Yet another sobering comment was made recently by Teunis Brosens of ING. He remarked: "At the current sales rate, it would take over 11 months to clear supply."