The Hometrack March survey of the national housing market reports a small fall of -0.1%. While it is the ninth consecutive month that house prices have fallen, it is the smallest decrease recorded for over six months, and follows a three-month trend of reducing price falls.

 All signs now point to the end of house price deflation with price rises continuing for the balance of the year. House prices now stand at £162,300, down from a peak of £167,700 in June last year.

Activity has increased again this month, with sales agreed rising by 16.5% (35.9% in February’s survey). This is partly due to a further increase in the number of buyers registered of 6.2% (28.5% in February’s survey) and a decrease in the amount of time it takes to sell a property to 7.4 weeks (7.6 in February’s survey). This is only the second time that the number of buyers registered with estate agents has increased since May last year.

With buyers coming back to the market, the discounts that are being negotiated on asking price have decreased for the second month running. This month the average sales price as a percentage of asking price is 93.4% (93.3% in February’s survey).

22 counties saw price rises or remained static and 35 saw price falls. The counties at the top end of the scale were Central London & City (0.8%), Derbyshire (0.8%), North West London (0.8%), North Wales (0.4%) ad East Riding of Yorkshire (0.3%). The counties reporting the largest price falls were Northumberland (-1.0%), South Yorkshire (-0.9%), Cambridgeshire (-0.9%), North Lincolnshire (-0.8%) and Leicestershire (-0.8%).

Of the cities, 28 saw price rises or remained static whereas 26 saw price falls. The top five were Derby (1.8%), Bradford (1.0%), Hull (0.7%), Portsmouth (0.4%) and Manchester (0.3%). The cities reporting the worst falls were Lincoln (-2.0%), Cambridge (-2.0%), Gloucester (-1.9%), Plymouth (-1.8%) and Leicester (-1.5%).

John Wriglesworth, Hometrack’s Housing Economist, comments: "House price deflation over the past nine months looks set to end, with house prices remaining broadly flat this month. An increase in the number of buyers, helping boost the number of sales agreed, points to a much stronger market in the coming months. Buyers are no longer getting the discounts off the asking prices they were earlier in the year, again suggesting the market is improving."

"Interest rates look set to remain stable over the months leading up to the May election, and the Chancellor’s raising of the stamp duty threshold is likely to have helped restore further buyer confidence. Meanwhile lenders continue to offer exceedingly competitive mortgage deals on ever higher multiples of incomes. We are confident that house prices will start rising over the next few months and we are therefore raising our 2005 full year house price inflation forecast from 0% to 3%."