Rightmove signals housing market upturn

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The Independent Online

The average price at which home sellers are putting their properties on the market has risen by 0.6 per cent over the past month, according to the estate agency group Rightmove, adding to a growing feeling that the housing market may finally have stabilised.

Rightmove said it had seen a consistent improvement in asking prices since the spring, following several months of very volatile trading. The agent said it had also seen a steady increase in the number of active sellers and buyers of property, which should underpin a housing market recovery.

"There is now clear evidence that there were some fire-sale prices last winter, when a few brave buyers correctly called the bottom of the market," said Miles Shipside, commercial director at Rightmove. "In most parts of the country prices have consistently improved during spring – with growing confidence that we've passed the bottom, buyers are more active."

Mr Shipside said there were now three possible scenarios for the property market for the second half of the year: a second downturn as rising unemployment hits confidence, a strong rebound as more buyers return to the market, or a slow but steady improvement.

The group currently rates the third scenario as the most likely, given that there continues to be a shortage of mortgage funding and that official mortgage approval figures in recent months have shown only a modest uplift.

While Rightmove's figures do not provide a clear view of house prices – since the agent can only monitor asking prices and not what properties eventually sell for – its data is in line with other surveys of the housing market. The last few months of figures from Nationwide Building Society and Halifax Bank, which do monitor sale prices, also appear to show the market has turned a corner, though neither mortgage lender is forecasting a strong recovery.

Nonetheless, considerable scepticism remains about the housing market because of the difficulty many buyers continue to have sourcing mortgage finance. The Council of Mortgage Lenders (CML) has this month refused to give a forecast for house price appreciation – or depreciation – in 2009, because it believes the outlook is so unclear.

Mr Shipside added: "Following a period of suspended animation in 2008 when activity froze, we have seen a considerable spring thaw. However, with only seven volume lenders remaining in the lending game, including three government-backed institutions that are prioritising their balance sheets over new lending, we are set to bump along the bottom for some time yet."

Separately, the CML has also been forced to defend lenders, which are facing accusations of hampering the possibility of any return to confidence by keeping mortgage rates artificially high.

Mortgage rates usually track the London Interbank Offered Rate (Libor), but recent falls have not been matched by lending rates.

The CML argues that banks and building societies use Libor as only one of a number of ways of setting lending rates, and that some are still struggling to raise money in the interbank market, which remains sticky after last year's banking crisis.