House prices edge ahead in January

Asking prices edged ahead during January as the number of homes being put up for sale fell to a two-year low, research indicated today.

The 0.3% rise in asking prices for properties in England and Wales during the five weeks to January 8 came after prices had fallen during five of the previous six months, dropping by 6.2% during December and November alone, according to property website Rightmove.

But the group said a shortage of homes being put up for sale, combined with a surge in demand from potential buyers, should help to underpin prices in popular areas in the run-up to the spring moving season.

An average of 9,159 properties a week were put up for sale during the five-week period, the lowest level since January 2009, and nearly half the 17,000 homes that were typically put on the market during January before the credit crunch struck.

There is a particular shortage of semi-detached homes, down 30% on last year, while there are around 10% fewer flats and terraced houses.

The group said the heavy snow in December would have played some part in the low level of listings, and it would be important to see if the figures bounce back during the coming few weeks.

Meanwhile, the market experienced its traditional new year surge in potential buyers, with Rightmove recording its busiest day ever on January 11, with more than 28.3 million pages viewed.

The figures suggest the current mismatch between supply and demand may be shifting back in favour of sellers, after a shortage of buyers had forced prices down.

But the group stressed that asking price rises in desirable areas were masking falls in less popular locations.

Overall, asking prices are 0.4% higher than they were a year ago at an average of £223,121.

Miles Shipside, director of Rightmove, said: "This month's price rise will come as a welcome respite to prospective sellers as they had witnessed falls in five of the previous six. However, it is a two-tier market.

"Those areas and property types coveted by mortgage-ready buyers are likely to experience a supply famine that will help underpin their prices this spring.

"Wherever the deposit-rich choose not to wander, the on-going mortgage famine will ensure sellers in those areas will remain buyer-hungry and will continue to see downward price pressure."

Asking prices increased in five regions of England and Wales during the period, while they fell in five regions.

The biggest falls in asking prices were in the North, where they dropped by 5.9% during the month, followed by Yorkshire and the Humber, where they fell by 5.4%.

The West Midlands saw the biggest increase at 7.4%, while in the East Midlands asking prices rose by 3.2%, but the current low level of transactions can make regional changes volatile on a monthly basis.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "One element of the Rightmove survey that offers potential support to house prices over the coming months is that the number of new properties coming on to the market was the lowest in two years in January.

"While this was undoubtedly heavily influenced by seasonal factors and the recent severe weather, it is certainly something to keep an eye on.

"Clearly, if the house supply-demand balance moves increasingly away from buyers towards sellers, it will provide significant support for house prices. Even so, we still consider that the fundamentals remain largely unfavourable for the housing market."