Although from a very low base, the traditional increase in housing transactions during the Spring did take place in 2009, despite the reported difficulties in obtaining mortgage finance. May housing transactions were up 43% over February 2009, against an average increase of 36% for the equivalent period over the last nine years. However the overall level of housing transactions in May 2009, at approximately 40,000, is down 62% from the average 103,937 homes sold in May, for the years 2000–2008.
Acadametrics Chairman Dr Peter Williams said: "The average house price has fallen well below the £200,000 mark and at £197,802 is now back to where it was in January 2006, that is more than three years ago.
"The monthly percentage change at -0.3% is one seventh of the peak monthly fall recorded some six months ago, at -2.2% in November 2008, and the data do suggest that the sharpest falls are behind us and that the rate of decline has now slowed significantly."
He added: "The average price of a home in England & Wales is now £197,802, ie, down £34,000 (£34,020) since its peak in February 2008 at £231,822. In percentage terms, from the peak to the current trough this is a fall of -14.7%, and compares to the -16.4% peak to trough fall in the previous housing downturn, 1989–1992.
"This might suggest we are nearing the bottom of the trough though there are some commentators who would suggest otherwise.
"On the basis of the evidence, however, we can note that monthly falls over the last two months are only half that of the previous four months, and that the rate of decline in the prices achieved in completed transactions has been slowing.
"Moreover the evidence from the FTHPI is in line with other indices taking into account the different bases used and the point in the process where price is measured. The FT house price index is based on all completed sales in England and Wales. It is not based on a sample and is based on the price actually achieved.
"Estate agent indices are based on the asking price of the seller, at the time the property is first put on the market, and thus are more a reflection of the seller’s aspirations than the price achieved, with many a seller subsequently lowering the price to find a buyer. The lenders’ indices are based on property valuations at the time a loan is granted to the borrower, and again may not reflect the final figure agreed between buyer and seller. They also suffer from the much reduced levels of activity.
"Overall the evidence suggests that the market is ‘bottoming out’ but the potential for further reductions remains, not least because of the acute under-supply of mortgages.
"Going forward this could be a serious downward pressure on the market. There is a degree of optimism in the air regarding the economy and the housing market at present. However, we know unemployment will continue to rise, that public expenditure which has helped underpin the market will be more limited going forward and that interest rates will almost certainly rise in late 2010. These factors along with continued shortages in mortgage finance may restrain or even reverse the recovery."
Have your say on this story using the comment section below