THE housing minister, Margaret Beckett, claims there are signs of an “upturn” in the property market despite official figures showing prices plummeting at an unprecedented rate.

She disclosed the government was already worrying about the next housing boom, and was intervening to ensure any recovery in prices does not squeeze people out of the market.

Her startling comments echo claims by Baroness Vadera, the business minister and close ally of Gordon Brown, who was ridiculed last week for claiming she could see the “green shoots” of economic recovery.

In an interview with The Sunday Times, Beckett declared that there are “indications” of an “upturn” in interest in buying property despite the continuing slump in prices.

Although Beckett emphasised that the signs of recovery were “quite recent and anecdotal”, she made clear that they were being taken seriously by the government. “We’re hearing indications of certainly a maintenance of customer interest, possibly even a bit of a pickup.”

She said she had heard evidence of recovery from some estate agents, and questioned why banks were not reacting to signs of revival of the market.

“Some people have been saying the appetite to buy has gone through the floor, but clearly we’ve had this anecdotal evidence of a bit of an upturn in interest.”

Her optimistic predictions come on the eve of a grim forecast from the heavyweight Ernst & Young Item Club, warning that 2009 will see the biggest peacetime downturn in the economy since 1931. It predicts a 16% fall in house prices this year and a further 6% drop in 2010. “ The housing market remains in dire straits, starved of mortgage finance,” said Professor Peter Spencer, Item's economic adviser. “Although bargain hunters are active, there seems little reason to buy until house prices stop falling. We do not see that happening until the end of 2010.”

The Treasury will tomorrow announce measures to kick-start bank lending, and a shift in policy on the terms of last autumn’s recapitalisation of the banks. The package, which could see taxpayer guarantees on bank and company fundraising of well over £100 billion, will be finalised today.

A YouGov poll for The Sunday Times shows that the Brown “bounce” has faded and the Tories have surged into their biggest lead since early October, before the banking rescue revived the prime minister’s ratings.

The Tories are up by four points to 45% since last month, with Labour down three on 32% and the Liberal Democrats slipping from 15% to 14%. The Conservative lead has more than doubled in a month from 6% to 13%.

The economy’s woes seem to be at the heart of the Tory revival, with more than nine in 10 people saying the state of the economy was “bad”, and David Cameron and George Osborne regaining their lead over Brown and Alistair Darling for their economic competence.

Figures this week will confirm that Britain is officially in a deep recession, with the economy having contracted by between 1% and 1.5% in the fourth quarter of 2008 and unemployment rising sharply following a spate of high-profile company failures.

Beckett’s comments were ridiculed by opposition politicians this weekend. Grant Shapps, the shadow housing secretary, said: “The government has lost all touch with reality. Experts say 75,000 families may be evicted from their homes this year, yet the housing minister actually seems to believe that life is getting better.”

Vince Cable, the Lib Dem Treasury spokesman, accused Beckett of “psychological games”. “There is not a shred of evidence to suggest this is happening. All the evidence I have seen suggests we are just in the early stages of a big, painful correction.” Beckett’s optimism is believed to be based on a survey last week by the Royal Institution of Chartered Surveyors (RICS), which said the number of new buyers registering with estate agents had risen to its highest level since 2006.

However, RICS also said the number of house sales per agent had dropped to its lowest level since the survey began in 1978, and that lack of mortgage finance was strangling the market.

Beckett said there was “considerable pent-up and growing demand” for houses, and warned of an “inflationary bottleneck” unless house-building continues apace.

“That’s the last thing we need . . . I’m sure a lot of people are thinking that one of the outcomes of these [economic] problems is that there will be lower-cost housing available. Well, not for long there won’t be, if the minute mortgage lending picks up, and the minute interest picks up, there’s nothing coming along to satisfy it,” she said.

She urged first-time buyers keen to get on the housing ladder to start researching their options now, predicting a “mad rush” when the economy picks up.

Before the recession, Gordon Brown pledged to build 3m new homes by 2020 to meet housing shortages across the UK. Beckett said it was a “tragedy” that the recession had struck just as the government was making progress to meet demand for new homes, and insisted there should be no let up in the building programme.

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