House prices remained unchanged in May, according to the latest House Price Index from Hometrack.
However, they will soon begin to fall again, Hometrack's expert warns, as long as first time buyers remain excluded from the housing and mortgage markets.
Hometrack's director of research, Richard Donnell said: "The willing purchasers that are returning to the market are largely confined to the more wealthy areas of the country and limited to those buying with cash or who require low LTV (loan to value) mortgages
"A broad based recovery in the housing market requires a broad base of buyers and the majority of would-be first time buyers
remain excluded from the market."
Despite this, the latest survey also found that the number of successful house sales continued to rise in May, up by 9.4 per cent, bringing the total increase to 43 per cent in the last three months – the same period in 2008 saw an increase of four per cent.
However, according to Mr Donnell, the increase is likely to slow as there is a growing problem with a lack of decent housing for sale.
"While supply remains static the number of buyers registering with agents continues to rise – up by six per cent in May and by 21 per cent in the last three months.
"Together with rising sales volumes the net effect has been to support overall pricing levels during the month," he said, adding
"There are a number of potential changes in the current dynamics between supply and demand that could result in further downward pressure on prices in the months ahead.
"For example, talk of green shoots could draw buyers back into the market and increase the supply of homes for sale which would ease the support to pricing."
Commenting on the housing market's future, he added: "The outlook for the economy remains far from certain and demand for housing is likely to remain subdued, especially from first time buyers and those with limited equity to help fund a purchase.
"Beyond this year there is also a risk of higher interest rates should inflationary forces build and higher mortgage costs would place an additional squeeze on household finances."Get mortgage quotes and advice »
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