Housing market rebounds, say agents

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The Independent Online

Homebuyers have flooded back into the property market pushing up prices, according to reports from Britain's estate agents. The number of properties changing hands last month surged by a quarter, the National Association of Estate Agents said today.

Annual house price inflation, as reported by estate agents, rose to 8.9 per cent - up from 7.6 per cent in May and reversing a declining trend seen since the start of the year.

In terms of the number of sales agreed, last month saw an increase to an all-time high of almost 15 per agent.

"Our latest survey suggests the tide turning with activity levels reaching an all time high and annual house price inflation rising again for the first time this year," said Melfyn Williams, the NAEA's president.

The number of viewings per property rose sharply to 27, up from 20 in May, suggesting buyers were being more active in their search for the right home.

The speed of the sales process also increased as the length of time from instruction to sale has fallen to 5.9 weeks in June, from 7.3 weeks in May.

The report runs counter to surveys from the Halifax and Nationwide, which reported a slowdown in growth between May and June.

All the surveys were carried out before last week's surprise cut in interest rates. This should lead to fresh falls in mortgage rates and trigger renewed interest in the property market.

"With continuing expectations of lower interest rates, consumer confidence is increasing and buyers are returning to the housing market," said Mr Williams.

However most economists expect the housing market to continue to run out steam, despite the latest rate cut, as rising unemployment and mounting debt levels force households to rein in their spending plans.

Alex Boorman, financial analyst at Datamonitor, said that cuts in mortgage rates would "add further fire to the housing market" and raise the potential for a significant slowdown over the coming 12 months.

He said the current rate of mortgage lending was "unsustainable" and would price an increasing number of people - especially first time buyers (FTBs) - out of the market.

However there was a glimmer of hope from the NAEA report, which showed that the proportion of sales to FTBs rose to 16.2 per cent from May's 14 per cent.

"While still below the 2002 average of 25 per cent, the June survey suggests that first-time buyers may be slowly returning to the market," the association noted.