Property prices are falling at their lowest rate for two years, sparking hopes that the end of the double-dip recession will boost the housing market.
According to the monthly national housing survey from Hometrack published today, year-on-year price deflation of -0.4 per cent is the lowest rate of falls since October 2010.
More positively, there are signs that prices are firming in northern regions with a steady decline in the size of the gap between asking and achieved prices over the last six months.
“There’s been a steady firming in underlying price levels in the north of the country, an area where values over the last 12-18 months have come under sustained downward pressure,” said Richard Donnell, director of research at Hometrack.
Despite a 9.2 per cent jump in sales agreed and a small increase in new buyers registering with agents, house prices slipped -0.1 per cent over the month in October, the third consecutive month that prices have fallen.
“Sales agreed climbed – particularly in the Midlands and Wales – because of the re-pricing of older stock to support sales growth,” said Mr Donnell.
Independent buying agent Gabby Adler said: “'The signs are that sellers are having to be more realistic about pricing their property if they wish to achieve a sale, which is no bad thing. Despite the shortage of stock, buyers remain in a strong position and are prepared to negotiate on price.”
Mr Donnell welcomed last Thursday’s news that the UK has moved out of recession. “However the foundation of any national and sustainable recovery in the housing market rests on growth in the wider economy and household incomes,” he said.
“Any recovery will most likely start to be seen in transaction volumes rather than prices.”
Ms Adler also welcomed the news that the UK has emerged from a double-dip recession. “It should have a positive impact on the housing market,” she said.
“Growth in the economy usually boosts consumer confidence, on which the healthy and prosperity of the housing market so precariously rests. With lenders also taking advantage of cheaper money being made available via the Funding for Lending scheme, it is all looking rather more encouraging.”
However the Hometrack report revealed that overall demand for housing remains subdued. A modest headline increase in demand nationally of 0.3 per cent was largely driven by a 3.9 per cent jump in new buyer registrations in London. That followed four consecutive months - June to September - of falling demand in the capital.
“In parts of London competition is very hot indeed with a rise in the use of sealed bids for good properties,” reported Ms Adler. “In such scenarios, property will often achieve more than the asking price.”
But she said more needs to be done to encourage those requiring higher loan-to-values in order to give the housing market a kick-start.
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