First rise in house prices for 18 months points to revival

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The Independent Online

House prices have risen for the first time in 18 months, according to a survey published today that provides further evidence that the housing market has turned the corner.

The average price of a house in Britain rose by 0.1 per cent to £160,900 in December from the previous month, according to the latest survey from Hometrack, the online housing research and database group. Other surveys and mortgage lending data from the Bank of England also point to a revival in the housing market.

According to Hometrack's survey of estate agents, five of Britain's 10 main regions saw small increases in house prices in the run-up to Christmas on the back of improving demand and declining levels of stock. Greater London reported the strongest rise - 0.3 per cent over the month - with much of the growth concentrated in the central parts of the capital.

Prices grew by 1.4 per cent in the central London and City area, which includes the residential parts next to the key employment centres of the West End, the City and Canary Wharf. Only one region reported a fall in property prices this month, while four regions saw prices remain at their previous level.

The survey also showed that buyers remain highly price sensitive. Vendors are still achieving on average only 93.5 per cent of the asking price when they sell a property.

Prices remained unchanged this month in more than 84 per cent of the country's postcode districts. The small rise in average values across the country was driven by increases in 9 per cent of postcode districts. Price falls were reported in just 6 per cent of districts.

Richard Donnell, the director of research at Hometrack, said: "A move to more realistic pricing over the past 12 months and improving buyer confidence has resulted in this small increase in average house prices."

Despite an improvement in market activity in the second half of the year, average house prices dropped by 1.6 per cent over the year as a whole. Hometrack expects values to rise by an average of just 1 per cent over next year.

In contrast to previous years, estate agents reported an unseasonal increase in the level of sales over December. Sales were up 3.7 per cent over the month, after a 4 per cent increase in November. This increase in sales activity has been bolstered by rapidly improving confidence among buyers, who are taking less time to make up their minds before settling on a property. The average number of viewings per sale has dropped to 11.3 from 12.4 three months ago.

Mr Donnell said: "After the very weak first half to the year there is something of an end-of-year rush with buyers keen to seal the deal before the new year."

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