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Housing market recovery continues

Housing market recovery continues

Category: Mortgages

Updated: 13/11/2009
First Published: 13/11/2009

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The upturn in the property market has continued, with the average price of homes sold in October rising for the sixth consecutive month.

According to Acadametrics, last month saw the average price of residential property transactions completed in England and Wales reach £208,401, 0.7% higher than in September and a return to the level last seen in September 2006.

"Clearly prices have stabilised and some of the more damaging outcomes of house price falls - losses on sales, negative equity and reduced mobility - are beginning to diminish," said Dr Peter Williams, Chairman of Acadametrics.

"This is encouraging, given the scale of the downturn over the last 18 months. Clearly affordability has improved marginally as has mortgage supply, but the market remains weak."

However, while the recovery seems set to persist right through to the end of 2009, there are warnings that a blip could be on the cards next year.

The latest forecast from Savills suggests the mainstream property market could fall by around 6% in 2010.

While the recent improvement in house prices has been largely due to a shortage of sellers, the property group expects more housing stock to come to the market just as the pent up demand from cash and equity rich buyers is satisfied.

Meanwhile, with few signs that the mortgage markets will ease over the coming 12 months, it is feared that mortgage dependent buyers will be unable to return to the market in sufficient numbers to maintain current price levels.

"In the short term, we are facing events with the potential capacity to discourage house purchases," said Lucian Cook, Director of Savills Residential Research.

"The uncertainty preceding an election - the prospect of public spending cuts, higher taxes, continuing mortgage rationing, further unemployment, possible stock market correction, inflation or future interest rate rises - all have the potential to impact the mainstream, even if the precise timing of such impacts is difficult to pinpoint."

Despite the likely stall in the recovery, prices are not expected to fall back to the lows seen at the start of 2009.

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