Housing market fall shows signs of slowing

Landlords are buying, price falls slowing, and more sellers achieving asking price
Click to follow

Britain's residential property market has shown early signs of recovery in March, as landlords have bought more properties than they sold for the first time in two years.

At the same time, the monthly rate of decline in house prices slowed to its lowest rate in 10 months, and the average percentage of the asking price being achieved by sellers increased for the first time in almost two years.

Three surveys to be published today all tempt another round of speculation about green shoots of recovery in the housing market. The Association of Residential Letting Agents (Arla) will reveal that the number of landlords buying properties more than doubled during the first three months of 2009, while the number of landlords selling properties declined. "The signs are that it's a buyer's market at the moment, providing of course you can get the finance," said Ian Potter, operations manager of Arla. "Clearly the interest is there and lenders need to sit up and take notice.

"These figures do not represent a move back to the imprudent days of landlords being indebted to an irresponsible level, and struggling to pay their mortgages. Rather it shows the buy-to-let market is going back to basics, to what it was meant to look like and achieve when it was set up some years ago."

The Hometrack survey of estate agents, which is also published today, will reveal house prices fell just 0.6 per cent in March – the slowest rate of decline since last spring. Over the past year, prices have fallen just over 10 per cent.

Hometrack's survey will also show that sellers on average achieved 88.8 per cent of their asking price in March, compared with a low of 88.3 per cent in January and February. The average time that properties are on the market also decreased, to 11.3 weeks.

"While market conditions remain extremely tough, and the economic outlook is far from rosy, the net result is that agents are currently marking down prices less aggressively than they were in the autumn," said Richard Donnell, Hometrack's director of research. "This could well reverse in the near term as much still depends on improved consumer confidence, a gradual recovery in mortgage lending and greater stability in the economic outlook."

A third optimistic survey, published by propertyfinder.com today, will reveal that consumer confidence in the UK housing market improved in March.

While 62 per cent of respondents still said they expect house prices to fall further, 38 per cent said they believe prices are now set to rise – up from 25 per cent in December.

Nicholas Leeming, a director of propertyfinder.com, said the UK housing market downturn has reached a new phase. "People are much less worried about affordability now interest rates have fallen," he said. "For those with a decent deposit, funding a mortgage is a breeze. But this is not enough to allay concerns over family incomes.

"Rising unemployment hits homeowners hard and while joblessness continues to rise, we should expect confidence in the market to be subdued."

He said any upturn will also have a wider positive effect. "When homes change hands people use all sorts of services such as removal firms, surveyors and so on, and will spend money on renovations and new consumer goods," Mr Leeming said.