House prices are down 10 per cent compared to this time last year, but the market is showing some signs of recovery.
According to the latest house price index from Hometrack, the good news is that more homes are being put up for sale and more are finding buyers, but unfortunately, sales are being agreed at prices well below sellers' expectations.
Hometrack has found that while new buyer registrations rose by 17 per cent and the sales agreed increased by nearly 36 per cent, the average sale price is just 88 per cent of the figure at which the property is first put on the market.
"After a weak end to 2008 the latest national housing market survey from Hometrack shows increased levels of market activity over February 2009, albeit off a low base," said Hometrack, but the mortgage expert says that increased movement should not be read as recovery just yet.
"While the percentage increase in activity may appear relatively high the underlying transaction levels of market activity are around 60 per cent lower than they were a year ago. As such this increase in market activity is off a very low base and falls well short of what could be classified as ‘green shoots’ of recovery," warmed Richard Donnell, Hometrack’s director of research.
Mr Donnell says that an uncertain economic outlook combined with the prospect of further falls in house prices, means that the majority of households are unwilling to move.
"Demand for housing does exist, but certainly not at the levels that were seen two to three years ago," he said.
Mr Donnell says that although there are plenty of current homeowners and cash buyers who could get the market moving again, the lack of high loan to value mortgage
deals mean that chains are getting stuck because first time buyers simply can't get the finance they need.
"While mortgage availability for higher loan to value borrowing remains limited this is less of an issue for buyers with a significant amount of equity in their homes or those who are cash buyers," he said.
"We estimate that there are over 8 million households who have either no mortgage or one that is less than 50 per cent of the value of their home - the pool of potential movers is large. Yet the majority of sales require chains to hold together and access to finance is a major constraint on parts of the chain that are reliant on high loan to value borrowing.”
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