A poll by moneysupermarket.com has found an alarming number of first time buyers are planning to take out a loan to cover the deposit on their first mortgage, because of the bank's making life difficult for anyone who doesn't have at least a 25% deposit.

Of the 13 percent of 18 - 34 year olds planning to buy their first home in the next year, 16 percent of them are planning to do so by taking out a loan for a substantial deposit. This is a bad move, according to Louise Cuming, of moneysupermarket.com.

"Anyone who takes a loan is effectively taking out a 100 per cent mortgage through the back door. Not only will the mortgage lender decline the application if it discovers this is the source of the deposit, but it is also a huge risk to the borrower - your monthly outgoings will be higher, which means there is a greater chance of you finding yourself unable to keep up with repayments," she said.

Cuming also said that high deposits were pricing many people out of the market, and suggested that lenders should assess the affordability of each mortgage on a case-by-case basis.

Only a quarter of those surveyed already have a deposit saved, other's are waiting for prices to drop further, and some are even hopeful of a swift return for 100% mortgages.

Currently lenders are offering their best rates to people who have a deposit of 40%, and anyone who has less than 25% to put down is finding their choice of mortgage product severely restricted.

As we all know, there is currently a lot of positive news in the housing market, with prices rising on a monthly basis for some months now according to some indices, by 2% since April according to the Halifax and Nationwide, and all indices including that of the government showing the rate of decline having slowed massively.

But as we all also know, this current reversal of the downward trend has not been caused by a massive upsurge in activity like you would expect if the market had bottomed, but is in fact based on a marginal increase in activity, which has acted in conjunction with a massive supply short-fall to put upward pressure on prices.

The trouble with that is, if supply increases faster than demand, the upward pressure on prices will evaporate and we will likely be in for further sharp declines as the actors putting downward pressure on prices, like the restricted mortgage market and soaring unemployment, are able to take their full effect.

Such a scenario would seem likely; as the positive news could well make the thousands of people holding their property off the market think that now is the time to go for the sell. With that threat seemingly hanging over us guillotine-like, it is easy to focus so completely on it to become blinded to any other possible outcome.

But is the positive news likely to make the holders sell now? When you think about it calmly the answer is no, not really; these people don't want to sell because of the losses they face on their property, the 2% increase barely bites into the 20% loss we have seen so far.

On the other hand: who wants to buy a house if it is going to lose even 10% of its value within a year, let alone the 40% falls some analysts were predicting a few months back? So it is surely equally possible that the currently positive news -- that has made even the likes of BOE guy say that the worst of the price falls are over -- would bring more buyers into play?

If the number of buyers was to increase greatly, faster than supply increases, which is possible if not likely, then this will increase the upward pressure on prices and accelerate the price rises and slow the rate of decline faster.

In this scenario, this continuation of price growth would indeed see supply levels start to increase, and this would be the beginnings of a sustained recovery in the housing market. The recovery started by shockingly low supply, well it's got to start somewhere.

Of course there are three very big problems, namely:

1. Unemployment is currently massive and still rising
2. Banks are still being very cautious about who they lend to (especially who they lend 125%LTV to)
3. Vendors still are not being realistic about their asking prices, according to Rightmove's latest index the average asking price of new additions to the site is 40% higher than the average Land Registry sale price. This is worsening the supply shortage

Sure, they are three problems, each capable of preventing my scenario from becoming a reality, not to mention the fact that with supply so short too many buyers may not be able to find a home suitable for them. The truth is no one can say with any certainty what is going to happen next. Time will tell.

The Department of Communities and Local Government (DCLG) house price index has showed that the rate of decline in UK house prices slowed in March. This comes after the latest release of the Land Registry index showed the rate of decline slowing in March, and Halifax and Nationwide a slowing decline for April.

Year on year prices were down 13.6% in March, and fell 3.8% in Q1 this year, compared to a 6.4% fall the previous quarter.

A slowing rate of decline is not, in itself, a sign that we are nearing the bottom. After over a year of the worst house price crash the UK has ever seen it is logical that the decline would slow. Spring is traditionally a good time for the housing market, from the low point we are at that translates to a less bad time.

The fundamentals that must be in place before the market will bottom have not been brought any closer:

There are still very few buyers around:

will be helped by recovery in the wider economy and greater mortgage availability.

Vendors are still unrealistic:

will likely be helped by increased buyer numbers

Homes still not affordable for first time buyers:

Will only be helped by prices falling further and by better (higher LTV) mortgage products for first time buyers.

The whole thing is a cycle, the first thing we need is for the recovery of the UK economy as a whole to begin. This will stave off rising unemployment, save jobs, reduce the fear mentality of those in at- risk industries (most people), and create new jobs. All in all more jobs and more job security means more people looking to buy houses.

More people looking to buy houses will increase vendor realism, or bring them to realisation quicker, because there will be no more excuses; the buyers are there, it is only there price that is stopping them from achieving a sale. This will go the same for mortgage lenders, more buyers and/or more realistic vendors will put pressure on the lenders to open up the market or risk snuffing out the recovery they pushed so hard for.

With UK house prices continuing to fall many people have been sitting on their hands rather than sell in such turbulent conditions.

That could all be about to change; there is currently a lot of optimism surrounding the latest release of Rightmove's house price index, which reported the 3rd consecutive monthly rise in asking prices. This could result in many people thinking the time is right to put their house onto the market, which could be greatly detrimental to UK house prices.

Rightmove recording a rise in asking prices is not a good sign. All other reputable indexes are showing prices still falling, there has been no massive increase in transaction numbers, and all signs point to prices continuing to fall. Therefore raised asking prices only affirm the recent reports that vendors are still unwilling to be realistic and drop their prices in order to sell.

This is bad news for UK house prices because it threatens to prolong the current freefall for those vendors who are realistic. Until eventually the majority of vendors are forced into realism by the market's bottom, indicated by hugely increased transaction and buyer numbers.

Anyone who wants to sell their property, but isn't quite yet ready to drop their price the 20-30% necessary to sell by traditional means, is advised to try unconventional means such as Zungalow.com. Richard McKay Zungalow director said sellers have "nothing to lose," from advertising on their site.

"Many people right now are thinking: how can I sell my house right now, I won't even get enough to pay off my mortgage? But that needn't be the case. Our £29 per year package is the perfect suck-em-an-see package for UK private home sales, you can show your house to a massive community of online property browsers, all of whom are free to make offers on your property, be they for a swap, or higher than the going rate," Richard explained.