Housing slump could have bottomed out

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The Independent Online

House prices were unchanged in July for the third month running, housing market analyst Hometrack said today, suggesting the slump in the property sector may finally have come to an end.

Hometrack’s monthly survey has reported 0 per cent changes to house prices in May, June and July, but the analyst said it had seen some positive signs of an uptick over the past four weeks.

The number of new buyers registering with estate agents rose by 2.8 per cent last month, Hometrack said, while the average time on the market for a property before selling fell to nine weeks, from 9.4 weeks in June. Just 3 per cent of postcodes nationwide saw a decline in average prices, it added, while the typical buyer is now achieving a sale price of 91.5 per cent of their asking price.

Nevertheless, Hometrack warned that the UK housing market remained fragmented, with a north/south divide in optimism. It also believes a strong recovery for house prices may still be some years off.

In the North, estate agents continue to report a difficult market, with weak demand for property. By contrast, almost all of the postcodes registering a house price increase during July – around 10 per cent of the UK – were in the South of the country, where demand has increased but supply is relatively limited.

Richard Donnell, director of research at Hometrack, warned that in the absence of a sizeable increase in mortgage lending and in the face of rising unemployment, the prospects for the housing market were poor.

“A sustainable and broad based recovery needs to be founded on both an improving economic outlook and availability of mortgage finance - employment is key to buyer confidence and with talk of unemployment figures set to rise to 3 million next year, the short term outlook for would-be buyers remains uncertain,” he said.

“In the last recession it took five years from the peak of the market to the beginning of a sustainable pick up in transactions and house prices. Approaching two years into the start of the current downturn, history suggests the market has some way to go before the real green shoots of recovery begin to emerge.”

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