House prices will start to rise again sooner rather than later, claims Assetz…

According to their latest monthly index, average UK house price grew 0.7% in February, the first positive monthly increase in price since October 2007. The company believes that this represents a turning point in the current market, providing a clear indication that there will be an upturn in house price growth as soon as next month.

Stuart Law, Chief Executive of Assetz, believes that this result indicates a ‘return to strength across the UK residential market’ and ‘provides further evidence that the downturn seen in recent months is simply part of a stabilisation process and not a market crash’.

“Have we witnessed an end to the reducing rate of house price growth? With annual house price growth stabilised at 5.4% for the second consecutive month, and monthly house prices up 0.7% in February - quite possibly.

Continued stabilisation

Mr Law continued: “The Rightmove house price index, which proves a good indicator of the property market (due to it recording initial asking prices rather than final sale prices), jumped 3.2% (£7,500) in February. Rightmove is also a leading indicator of what may happen in other indices later in the year, as mortgages get approved and the land registry records sales.

“I anticipate that we’ll see a continued stabilisation and even an upturn in monthly house price growth over the following months, with annual growth still likely to stabilise at around 5% for the year.

“The supply/demand imbalance is simply not going away, and is showing very strong signs of worsening in the short to medium term, with huge (40%) falls in new development making prolonged price falls a very unrealistic outcome due to the normal laws of economics.

“I strongly suspect that many will be surprised by a return to house price growth sooner rather than later but the remaining risk to stability is the credit crunch, as the result of banks’ greed continues to unwind. This remains the greatest risk to the housing market and the economy as a whole at present.”