Hometrack sees first rise in house prices
Hometrack has recorded the first month on month increase in house prices for a year and a half
Wednesday, 28, Dec 2005 11:40
Property analysts Hometrack have recorded the first monthly rise in house prices for 18 months, it emerged today.
The firm's house price index has consistently been the most pessimistic of the various measures of the property market due to its unique calculation method.
Hometrack polls estate agents across the country to determine whether house prices are rising and falling - this, it argues, provides a more realistic picture of UK property values than the other indices.
Generally house price indices use data from sales, offers, or mortgages to calculate the average house price. But Hometrack argues that this simply means that the data is biased towards areas of the country where the property market is doing best - as this is where most houses are changing hands.
By contrast, areas where the market is performing less well are underrepresented as fewer homes change hands there.
But with even Hometrack's index now recording growth, it seems the UK property market has turned the corner at last.
But this move to an increase in average house price was small, at 0.1 per cent, and does not mean property values are set to soar again.
"A move to more realistic pricing over the past 12 months and improving buyer confidence has resulted in this small increase in average house prices," said Richard Donnell, director of research at Hometrack.
But this small rise in prices between November and December has not been enough to cancel out 18 months of falls.
"Despite improving levels of market activity over the second half of 2005, average house prices have fallen by 1.6 per cent over the year," he added.
Mr Donnell concluded: "After the very weak start to the year, the pick up in market activity over the second half of 2005 has clearly acted as a support to average prices, aided by declining levels of stock available for sale.
"However, it is clear that buyers remain highly price and quality sensitive. Whilst activity levels may have improved over the autumn of 2005 on the back of more realistic pricing it does not automatically follow that prices will start to rise.
"Affordability constraints remain the biggest barrier to house price growth in the short term and we expect average prices to rise by just one per cent over 2006."
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