Spring’s here, the housing market is stirring, so is it time to buy?

So is now the time to buy? There are certainly reasons to be tempted.

Average prices in London are down 20% from their peak in late 2007, interest rates are at historic lows, and there is little in the way of competition as the scramble associated with a recovery has yet to begin.

Distressed sellers, many of whom have lost their jobs and can no longer afford their mortgage, are accepting offers well below the asking price, and there are deals aplenty in the auction rooms where banks and building societies are offloading repossessed homes at knock-down prices.

But this does not mean the bottom of the market has been reached, and all the evidence points to further price falls, of another 10% or more.

City investment bank Shore Capital is even more gloomy and reckons house prices could more than halve from here, giving a peak-to-trough decline of over 60%. Analyst Jon Bell argues that a fall in wages could mean affordability is not restored for nearly a decade.

Of course, each pocket of London and the South-East behaves differently, and family homes in desirable locations have suffered less and could already be nearing good value. However, with stock levels low, any home on the market failing to sell is probably overpriced.

Prices in Haringey and Newham are down nearly 30% compared with more modest single-figure falls in Hackney and Islington. Areas that enjoyed the biggest rises during the boom are suffering the biggest falls. New-build flats have lost significantly more of their value than three and four-bedroom houses in more established areas towards the top end of the market.

Much was made of figures published by Nationwide showing house prices rose 0.9% in March but even the building society said it is "far too soon to see this as evidence that the trough of the market has been reached".

Just a day later the Halifax said prices fell 1.9% in March and it is worth remembering that during the crash of the 1990s house prices rose roughly once every three or four months despite the overall downward trend.

Few in the industry really believe the pick-up in activity is anything more than a "spring bounce" after a dreadful period at the end of 2008. Estate agents may be reporting more interest from potential buyers, but this is not converting into a meaningful increase in sales. And it is not likely to any time soon given the restricted availability of mortgages, rising unemployment, and likelihood that prices have further to fall.

A bout of deflation may be on the way for the wider UK economy, but a deflationary spiral is already steering the housing market - why buy now if you can do so for less in six months' time? The Government may even choose to extend its stamp duty holiday in the Budget on 22 April.

Mortgage lending has been on the slide since the start of the credit crunch in 2007 but fell off a cliff after the collapse of Lehman Brothers in September last year. The recent rise - to 38,000 approvals in February - is from a pitifully low base of nearly 32,000 in January and a record low of 27,000 in November. That's nowhere near the 100,000 a month seen in the boom.

Interest rates may be low, but they won't be forever, given the inflationary threat of quantitative easing, and banks that are lending demand huge deposits. It is not the cost of mortgages but their availability that is stifling the market.

UK banks propped up with taxpayers' money have increased lending under intense pressure from the Government, but a huge void has been left by the withdrawal of foreign banks. Until this void is filled, mortgage lending cannot possibly return to pre-crunch levels.

Unemployment is also a major factor. It has already topped two million for the first time since New Labour came to power in 1997 and looks set to hit more than three million or even 3.5 million before the recession is over.

If another 1.5 million workers are to lose their jobs in the next 12 to 18 months, just reckon on the number worried it could be them, and what impact this will have if they were thinking of buying a house.

Of particular concern is the plight of younger workers and those looking for jobs for the first time. Unemployment in the 16-to-24 age group is rocketing, robbing the housing market of all-important first-time buyers responsible for driving growth at the bottom end of the market.

Prices have fallen sharply since the housing boom came crashing to an end and bargains are available. But those looking for the bottom of the market will have to wait for some time yet.

Green shoots are emerging this spring, but there will be no sustained recovery until next year.