House prices up 0.9% in March despite continued mortgage shortage

17 March 2009 / by Rachael Stiles
House asking prices have risen for the second consecutive month, showing a 0.9% increase in March, according to the Rightmove House Price Index.

Despite continued restrictions on mortgage lending, the property website said the figures illustrate "encouraging spring impetus" as buyers seek out bargains after months of falling house prices.

House asking prices have fallen nine per cent year-on-year, Rightmove.co.uk's survey found, with the average property now selling for £218,081, up from £216,163 in February but still down from £239,655 in March 2008.

The rise could be accounted for by the falling number of new properties coming onto the market, as sellers are put off by the extent to which they have been forced to drop prices in recent months in order to secure a sale.

Estate agents saw a 57 per cent fall in new listings this month compared to the same time last year, the survey found – 79,000 down from 182,000 in March 2008.

However, agents have also reported renewed buyer interest, with enquiries up 120 per cent on last year's figures, but those who have adapted to the new market conditions are struggling to translate into sales as mortgage funding remains scarce.

"We are seeing a big jump in enquires, looking for those best buys," said Miles Shipside, commercial director at Rightmove.co.uk. "However, it is disappointingly predictable that the banking sector is still in the early stages of coming clean about its levels of toxic debt, limiting funding for one of the few bright spots of consumer demand in the economy.

"Until banks get their own houses in order, the active minority of sellers and agents who have drastically adjusted pricing will remain frustrated by the limited functioning of the financial services sector."

Current conditions in the economy are likely to have an adverse effect on the traditional seasonal increase in trading that comes with spring, Rightmove predicts, as it reports its lowest number of new sellers during the month of March since 2003.

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