Housing market picking up

The first increase in demand for property since the start of the credit crunch has been noted, according to a national housing survey. House prices are likely to remain under pressure in the short term, however, as they fell for the fifth month in a row this month, according to the latest figures from Hometrack. There are signs of a modest improvement in demand due to lower interest rates, with average prices down by 0.2% over the month and the annual growth rate slipping to 1.4%, the lowest level since April 2006. Despite a continuing weakness in underlying prices, the study shows some signs of higher demand with the first increase in new buyer registrations since last summer. In the wake of the credit crunch, demand for housing fell by 45%, but the latest Hometrack survey shows a small, yet important, turnaround in demand over February, says Richard Donnell, Hometrack s director of research. The modest increase in new buyer registrations is evidence of firming demand, largely on the back of recent interest rate cuts, with London and the south east registering the largest increases. Yet, the growth in demand over February was far lower than over the same period in previous years, believes Mr Donnell. The number of homes for sale has increased more than demand in the eastern, north west, Yorkshire and Humberside regions and Wales, where prices are set to remain under pressure in the short term. While the latest figures show prices are down across a third of the country, we expect the extent of these falls to slow over the coming months as demand continues to improve. However, with affordability levels remaining stretched there is unlikely to be much upward pressure on average prices over the next few months, Mr Donnell added.