News

Figures point to housing revival – By Gabriel Rozenberg and Gary Duncan

The Times (Business Section) – 28 March 2005

Fresh signs have emerged that the housing market is stabilising and that prices could be on the way up again.

A survey from Hometrack has found that house prices fell by 0.1 per cent in March, the smallest decline recorded for six months, adding weight to a gathering sense that the decline in the housing market’s fortunes has ended. At the start of a week in which a welter of statistics on the state of the housing market is being released, Hometrack announced that house prices now stand at an average of £162,300 down from a peak of £167,000 last June.

In a sign that sellers are regaining control, the average sale price as a percentage of the asking price rose to 93.4 per cent, from 93.3 last month.  

Activity is also increasing, with sales agreed up by 16.5 per cent, after rising by 35.9 per cent in February.

John Wriglesworth, Hometrack’s housing economist, said: “An increase in the number of buyers, helping boost the number of sales agreed, points to a much stronger market in the coming months.”

Mortgage data due this week will provide a further sign of whether the downturn in the property market is abating.

Mervyn King, the Governor of the Bank of England, suggested to MPs last week that both price and activity indicators from the housing market suggested that the pace of the downturn had eased, and that prices were broadly flat.

The latest figures for mortgage approvals by leading lenders, due out on Thursday, will give further clues to market conditions.

The consensus expectation in the City is that the approvals of home loans yet to be made will have increased slightly last month, to perhaps 80,000 from January’s 70,000.

Other figures will also provide indications of the extent to which the property downturn is affecting consumer confidence and demand. National accounts numbers for the fourth quarter of last year now show that consumer spending slowed abruptly in the final months of last year.

The latest snapshot of high street activity this month, from the CBI, is to be released on Wednesday and will be closely watched for clues to the trend among consumers.

Capital Economics expects spending and activity to have seen a modest improvement this month.

The Hometrack survey found that the areas of Central and North London, along with Derbyshire, were enjoying the best price improvements. House values rose by 0.8 per cent in those areas.