Second month of steady house prices

Increased demand for homes saw house prices hold steady for a second month in a row during June, research has shown.

Housing intelligence group Hometrack said the average cost of a property in England and Wales stayed at £155,600 during the month, unchanged from the level it reached in May.

There was also an easing in the annual rate at which house prices are declining, with property values 8.7% lower year-on-year in June, down from a 9.6% drop in May.

The current consistency in house values has been put down to rising sales volumes, a dwindling supply of homes on the market and a continued increase in demand.

Price falls were only experienced in 3% of postcode areas, down from 32% in April and almost two-thirds (60%) at the beginning of the year.

Richard Donnell, director of research at Hometrack, said: "A lack of supply and rising demand have combined to prop up house prices in the last two months.

"Over the last six months, the volume of buyers has grown by 36%, this compares to a 6.4% increase in the number of homes for sale."

Estate agents reported a further 5% increase in registrations from potential buyers during June, but there was only a 0.8% increase in the number of properties that were put on the market during the month.

The mis-match between supply and demand contributed to the average time for which a property is on the market dropping for the fifth month in a row to 9.4 weeks, while the percentage of their asking price that sellers achieved rose for the fourth consecutive month to 91%.

Sales levels also rose by 4.6% in June, and transaction volumes are now up by more than 80% since the beginning of the year, although the group cautioned that this was off a very low base.

Data on the housing market has been increasingly positive during the past few weeks, with both Halifax and Nationwide reporting house price rises during May, while other indexes have shown rising transaction levels.

But economists have warned that they do not think the market has reached the bottom of the cycle yet, with most expecting further house price falls over the coming months.