The Hometrack May survey of the national housing market reports a further fall of -0.1%. This is the eleventh consecutive month that house prices have fallen.

However, over the last three months house price falls have only been decreasing at a rate of -0.1% per month, which suggests that the market is stabilising. Prices now stand at £161,900, down from a peak of £167,700 in June last year and down 2.3% over the last 12 months.

In contrast to the ongoing house price malaise, housing market transactions have seen a further marked improvement. Sales agreed have risen by 7.6% this month (9.4% in April’s survey), suggesting that the market is turning the corner. This increase in activity is mainly due to an increase in the number of buyers coming back to the market of 2.2% (5.4% in April’s survey).

	Key housing market statistics (May 2005)
National house prices: rise over the month		-0.10%
National house prices: rise from May 2004 to May 2005		-2.29%
hometrack national house price inflation forecast for 2005		0.00%
Consensus estimate for national (UK) house price rises for 2005		0.00%

However, as the number of new instructions continues to increase, an oversupply of properties means that it is still a buyer’s market and prices are still decreasing.

Sales price as a percentage of asking price has increased slightly this month to 93.6% (93.3% in April’s survey) indicating that house price deflation has resulted in more realistic asking prices.

The amount of time it is taking to sell a house has stayed stable at 7.4 weeks, whereas 12 months ago houses were taking just 4.1 weeks to sell. Properties are sticking on the market as buyers have a lot more choice due to the back log of properties registered with estate agents.

The average number of viewings has slightly increased to 12.5 (12.4 viewings in April’s survey).

19 counties have seen price rises or remained static this month, and 38 have seen price falls. The counties at the top end of the scale are Central London & City (0.2%), London – North (0.2%), Essex (0.1%), London – South East (0.1%) and Northamptonshire (0.1%). The counties reporting the largest falls are South Lincolnshire (-1%), Shropshire (-1%), North Yorkshire (-0.8%), London – North West (-0.7%) and Derbyshire (-0.5%).

Of the cities, 34 have seen price rises or remained static whereas 20 have seen price falls. The top five are Hull (0.6%), Chester (0.3%), Cardiff (0.1%), Exeter (0.1%) and Bath (0%). The cities reporting the worst falls are Shrewsbury (-3%), York (-1.3%), Swindon (-1.3%), Lancaster (-1.2%) and Gloucester (-0.8%).

John Wriglesworth, Hometrack’s Housing Economist, comments: "House prices are falling like drizzly spring rain, slowly and over most parts of the country. While there is no sunny outlook in prospect, there are no signs of a gathering storm either. The forecast for the next couple of months looks set to remain dreary."

"On the economic front, however, with new expectations of lower interest rates and ongoing rising incomes we expect a mild recovery in the second half of the year. Homes are still affordable, and mortgage lenders are offering very competitive deals. All the market needs is a spark of consumer confidence, which will extinguish misplaced fears of significant house price falls. The ongoing market malaise has caused us to revise our house price forecast for 2005 from 3% to 0%. The year looks set to end as it began in terms of house prices, as flat as a pancake."