This third consecutive monthly increase may be more than a seasonal bounce. It could be argued that one or two months of rises is the result of traditional spring optimism and volatility caused by low volumes, but three months in a row and the biggest rise for more than a year may indicate a price floor has been reached and confidence is starting to return.
More properties are also coming onto the market with 22,000 new sellers per week – up 13% on previous month.
However, many new sellers are still starting too high with around 80,000 lowering asking prices by 2% or more each month.
And any early signs of recovery must be put into the context of mortgage approvals which are currently running at a mere third of recent levels.
Miles Shipside, commercial director of Rightmove said: "My view is that many sellers are still starting too high, but the fact that they are coming to market in greater numbers and feel they can ask more shows a strengthening in resolve and confidence, which is an encouraging sign. It looks like we are now bumping along the bottom of the trough, but for there to be any real sense of optimism that we’re on a sustainable road to recovery, the availability of mortgage finance needs to improve significantly, given that mortgage activity is currently running at around a third of its average levels between 2002 and 2007.
"Thankfully mortgage lenders are finally starting to release more funds to finance new house purchases."
Estate agents report a continuing increase in sales levels beyond the 19% uplift in mortgage approvals reported by the Bank of England for February, indicating that the trend of improving transaction volumes could continue, albeit from a chronically low base.
Feedback from estate agents suggests that prices actually being achieved are still around 25% below peak prices in many instances, though quality homes in desirable locations perform better.
Those parts of the country that have adjusted to the credit famine have found that prices have stabilised at around this level, giving substantial leeway for sales activity to increase if credit restrictions were to be relaxed.
Shipside said: "2009 will not see the triple whammy of recovery of confidence, the economy, and institutional lending. Some sellers are doing deals at prices that have adjusted to the new reality, though there also remain some real property black spots of overpriced supply outstripping recession-dimmed demand. Those less desirable and harder-hit areas will lag well behind in the recovery given the new era of financial prudence, and those that have to sell must be even more realistic."
With repossession numbers still muted due to lower mortgage payments and mortgage lenders’ "Pre-Action Protocol" to keep borrowers in their homes, this shows a genuine return of discretionary sellers deciding the time could be right to do a
deal. As a result, average stock per estate agency branch has risen from 71 to 72.
However, with far fewer agents in business than last year and reduced levels of new build, the overall number of properties available remains at historically low levels, underpinning initial asking prices.
It is possible that both this price support and lower inventory levels are the result of a paradigm shift in potential seller behaviour, due to a significant percentage being deterred by the up-front costs of a Home Information Pack
Shipside said: "With only 38,000 mortgage approvals recorded in February, it will be a real challenge for mortgage lenders, including the Government-owned institutions to satisfy the mortgage needs of both these 111,000 new sellers and those who are already active in the market."
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