New buyers are returning to the housing market confident that interest rates have peaked, according to a report published today.

The number of buyers registered with property website Hometrack jumped 28.5% in February and although the New Year normally sees an influx of buyers, Hometrack believes the increase is more significant. "The size of the increase suggests a revitalisation of the market," it concluded.

The report also shows a 36% increase in completed sales in February compared with January. Also the average time to sell a property fell marginally to 7.6 weeks, the first fall since May 2004.

In spite of these positive signs however, Hometrack said house prices fell by 0.2%, the eighth consecutive monthly fall, pushing down the cost of the average house to £162,500 from a peak of £167,700 last June. Nevertheless, it added that the February decline was the lowest since August last year.

Hometrack's housing economist, John Wrigglesworth, said: "After eight months of housing market doldrums, the first signs of a robust recovery have appeared. A significant rise of new buyers, and an even more marked increase in agreed sales have stabilised prices. An analysis of recent trends suggests the worst is definitely over in terms of price falls."

"We expect prices to resume their long-term inevitable upward movement before the end of the year, fully compensating for the recent falls."

"A more stable interest-rate outlook, ongoing low unemployment, and rising household incomes will all help support rising house prices by the end of the year."

Some commentators think Hometrack's findings may fuel market expectations that the Bank of England will raise the cost of borrowing again soon. Last week, minutes of the last meeting of the Monetary Policy Committee showed that they considered raising base rate another quarter point to 5% and one of the nine members, deputy governor Rachel Lomax, argued in favour of pre-emptive action.