In addition, prices are only down 0.7% in 2009 to date and up 1.1% in May alone.
The average UK house price now stands at £185,276, only marginally lower than in Jan 2009 (£185,392).
Assetz said the bottom of the curve had passed. Distressed property prices stopped falling some months ago but now, as expected, the mainstream market was now experiencing the same recovery.
Buyers holding out for the bottom have the market may have missed the prime buying opportunity and should aim to buy in the next few months while interest rates remain low and before asking prices rise too steeply.
The stagnation of the development industry has severely restricted the flow of new properties and with developer finance constrained it could take years for new build starts to recover. This will worsen the supply/demand imbalance which will support strong price growth over the next five to ten years.
The rate of house price growth fell back for the first time between the summer of 2004 and 2005. At this time it went close to a 0% annual rate of growth, before shooting up again until late 2007. We have since had a substantial market correction which is now reaching an end, and Assetz said it expected house prices to continue growing positively on a monthly basis for the remainder of the year.
First-time buyers have a higher average wage than the UK average as a whole – £35k vs £25k, and they also buy lower cost properties – around £120k rather than the £185k national average. Therefore, mortgages are around three times earning again, which is very affordable, even more so at current mortage rates.
Stuart Law, Chief Executive of Assetz, said: "All indicators now suggest that we have passed the bottom of the house price curve. While we can’t read too much into one set of figures alone, all the major indices and the recent RICS survey are all indicating an end to falling prices and an increase in activity.
"Extreme supply limitations and the recent introduction of some interesting new first-time buyer mortgage products will help support market recovery and it is likely we will see a flurry of higher loan to value rates released as soon as it is widely recognised that the market has stabilised and the risk to the banking sector of further housing equity losses has diminished.
"I believe that my original prediction of -5% price falls for the whole of 2009, although at the most positive end of commentators’ projections, is now looking too pesimistic. I expect to see a return to positive year-to-date growth for 2009 by the end of the summer, with an overall growth of around 5% or greater. We expect further sustained recovery in 2010 with concerns over the effect of further job losses overstated in the face of current housing market conditions."
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