RTTNews - House prices in the U.K. increased in July as buyer activity remained strong on rising confidence that the market has passed the bottom, a closely watched survey showed Monday.
According to property website Rightmove, house prices rose 0.6% in July from the previous month compared to a 0.4% fall in June. This was the fifth monthly growth in 2009. After rising 0.6%, average asking prices totaled GBP 227,864 in July. Continuing its annual fall, house prices were down 3.1%, slower than the 5.5% decrease seen in June.
The Rightmove said the housing market will remain in a 'steady state' during the second half of 2009. In the second half of 2008, prices were in a freefall as sellers lowered their prices by circa 2% a month. But most buyers held back dragging the transactions to a 50-year low. With average rises in prices, a price undershoot was rectified itself this spring. Option to pick up the best buys in popular areas in this phase of the market is therefore closing.
Miles Shipside, commercial director at Rightmove said, With growing confidence that we've passed the bottom, buyers are more active, although they may discover that many of the best buys have gone. Rising confidence and activity are tempting more sellers to test the market as they try to gain advantage of the smaller price difference to trade up to a better home. Normally, two-third of sellers are also buyers, though they show reluctance to come to market while their main asset is still falling in value.
The number of new sellers measures was the highest so far this year with an initial increase of 6.7% since the beginning of 2009 and better prospects of finding a buyer. This month's average was 21,364 a week and, though it was still below the historic norm of circa 35,000. It represented a 20% increase in sellers coming to market compared to the previous year-to-date average.
Shipside added, More sellers looking to buy are good news for the market, as they help build longer chains, which build transaction volumes. We are seeing this come through in the gradually increasing mortgage approval and transaction numbers, though for momentum to build, it is essential these sellers are realistic on their pricing.
Further, average asking prices rising nearly 7% so far this year and transaction levels bottoming out, the quandary for many existing and aspiring home owners is the future direction of the housing market given the continuing UK and global recession.
... with only seven volume lenders remaining in the lending game, including three government-backed institutions that are prioritizing their balance sheets over new lending, we are set to bump along the bottom for some time yet, Shipside noted.
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