National house prices have risen by 0.1% over January according to the latest Hometrack survey.  The impetus for growth over January came from London where a lack of supply and a continuing improvement in demand resulted in average prices rising by 0.2%.

Elsewhere average prices have remained largely unchanged in the wake of the festive season. The survey shows that over January average prices remained static across 85% of the country’s postcode areas, with 9% of areas registering price rises and 6% reporting price falls. 

January blues

Seasonal factors caused activity levels to drop by 13.7% in January which is to be expected at this time of the year as buyers and sellers hold back over the Christmas and New Year period. Hometrack expects activity levels to improve over the next few months.

“The scale of new buyer registrations over the next few weeks will be an important indication of what sort of year we can expect for the market” comments Richard Donnell, Director of Research at Hometrack. “Activity levels held up quite strongly over the final weeks of 2005 compared to previous years. The key question is whether the momentum from late 2005 will revive over the next few weeks. If it does then values are likely to keep rising in the run up to Spring”.

Price sensitive

Despite the improvement in market conditions over the final months of 2005 buyers are set to remain highly price and quality sensitive over 2006. The average sales price as a percentage of asking price has risen slightly to 93.9% from 93.5% last month, compared with the average of 95% over the past four years.  The average time it takes to sell a property remains unchanged at just over 8 weeks although in the regions away from the south the average time taken to sell continues to rise. 

Key regional trends

This month, agents reported price falls in just one out of the ten main regions whilst seven regions saw prices remain unchanged.

The remaining two regions reported small increases in average property prices due to improved buyer confidence and lower levels of stock available for sale. The highest growth was seen in Greater London where values grew by 0.2% over the month whilst prices in the South West grew by 0.1%. Continuing the trend from the Autumn, it is the central areas of London that are registering the strongest growth with values up by 0.8% in Central London and the City.

Away from the capital there are other parts of the country where prices picked up over January, primarily cities in the south of the country. Prices are reported to have grown by over 1% in Exeter and Salisbury whilst values grew by over 0.5% in Oxford, and Brighton. The pick up in growth in these southern cities is most likely a result of limited availability of housing for sale and the continuing improvement in levels of demand.

Richard Donnell, Director of Research at Hometrack comments: “The pick up in activity levels and prices over the final quarter has created optimism that vales will continue to rise slowly over the year ahead. However, the analysis available from the Hometrack survey points to price sensitive buyers and static prices across much of the country. The recovery in London is set to continue and spread the South East over the year. The question is whether the slowdown of last year has resulted in a proper re-alignment of house prices and incomes across all parts of the market. We expect some regions to under-perform over 2006 as the re-alignment of prices continues against a background of rising sales periods and softening asking prices.”