Housing market shows bounce in asking prices

Property asking prices returned to growth in July, following a fall in June, boosting hopes that the housing market may be past the worst of the crisis.

The average asking price in England and Wales rose by 0.6% to £227,864 in the month to 12 July, according to property website Rightmove. The number of new sellers also rose by 20% to the highest level this year.

The firm said the increase suggested that the bottom of the market was behind us and forecast the sector to remain in a “steady state” for the rest of the year.

Commercial director at Rightmove Miles Shipside said: “There is now clear evidence that there were some fire-sale prices last winter, when a few brave buyers correctly called the bottom of the market.

“In most parts of the country prices have consistently improved during spring. 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.”

Asking prices are now up by 6.7% since the start of 2009. A 0.4% decline in June followed four months of consecutive rises.

Rightmove raised the possibility of a “double dip”, where asking prices fall by 10% in the second half of the year, driven by rising UK unemployment and a flood of repossessed properties coming onto the market.

But the body said the most likely scenario was a flat market for the rest of 2009 as a lack of mortgage lending delays full recovery.

Shipside said: “Following a period of suspended animation in 2008 when activity froze, we have seen a considerable spring thaw. However, with only seven volume lenders remaining in the lending game, including three government-backed institutions that are prioritising their balance sheets over new lending, we are set to bump along the bottom for some time yet.”