Home prices rise again in March

New sellers are being unrealistic about how much their homes are worth, meaning that house prices rose for a second month in a row in March, figures show.

The average asking price for a home in England and Wales increased by nearly £2,000, or 0.9%, during the four weeks to March 7, following a 1.2% jump in February, according to property website Rightmove.

But the group warned that the price increase was because of sellers failing to accept how far prices had fallen in the credit crunch, rather than because of a rebound in the market.

It also said that estate agents could be agreeing to market properties at unrealistically high prices in a bid to win new business at a time when only a few homes are being put up for sale.

Rightmove said there was evidence that buyers were going for homes that cost around 25% less than at their peak, but warned that this discount appeared to be putting many people off marketing their home.

Only 78,901 homes were put on the market during the four weeks, 57% fewer than during the same period of 2008 and the lowest level for March since 2003.

But interest from potential buyers is continuing to increase on the back of recent interest rate cuts and house price falls, with Rightmove reporting a 120% jump in enquiries compared with this time last year.

Miles Shipside, the group's commercial director, said: "Some sellers are still pricing wishfully high, though it is encouraging that elements of the market have adapted relatively quickly to find a new price floor at a discount of around 25% from peak.

"We are seeing a big jump in enquires, looking for those best buys. However, it is disappointingly predictable that the banking sector is still in the early stages of coming clean about its levels of toxic debt, limiting funding for one of the few bright spots of consumer demand in the economy."

The lift in asking prices to an average of £218,081 also caused the annual rate at which house prices are falling to ease slightly to 9%.