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May brings end to house price falls
Almost two years of house price falls ended in May, when the average cost of a home in England and Wales remained static, new figures show.
It was the first time in 20 months that average house prices did not change, according to housing intelligence group Hometrack, which reported price falls in just 13% of postcode districts compared with 58% in January and more than 70% last autumn.
The group said that market confidence had been boosted by a combination of stronger sales volumes, continued buyer interest and a dwindling supply of property for sale.
The number of sales agreed rose by 9%, with a 6% increase during the month in the number of potential buyers registering with estate agents, and a 21% rise in the last quarter.
However, Hometrack cautioned that it was too soon to predict a recovery in the housing market, with its director of research, Richard Donnell, commenting: "While house prices remain unchanged over May the outlook for the housing market remains fragile with a number of factors that could well de-rail the recent pick up in market activity.
"Given the weak outlook for the economy, house prices are expected to remain under downward pressure for the foreseeable future."
Sellers' had re-aligned their prices with what purchasers are prepared to pay, Mr Donnell said, adding: "Yet as we have highlighted previously, overall levels of market activity are well down on what would constitute normal market conditions."
He said that credit was still an issue and those buyers returning to the market tended to be people able to pay in cash or requiring a low loan-to-value mortgage.
May's increase in the number of sales being agreed is in sharp contrast to the same period in 2008, when there was just a 4% rise in sales and confidence amongst buyers was melting away.
There has been a raft of positive data on the housing market in recent weeks, with both transaction levels and mortgage approvals for house purchase increasing.
Figures from Nationwide Building Society suggest that house prices rose by 1.2% during May, the second increase in three months for the lender's survey. But a 9% fall in mortgage advances reported by the Council of Mortgage Lenders for April prompted economists to warn that any recovery was likely to be gradual.
Copyright © Press Association 2009
