New buyers 'staying away' from UK housing market

The imbalance between supply and demand showed further signs of easing during February as potential new buyers stayed away from the housing market, research showed today.

Only 258 house-hunters registered with estate agents during the month, the lowest level for a year and down from 291 in January, according to the National Association of Estate Agents.

At the same time, the average number of homes estate agents had on their books rose slightly to 56 from 55, as recent price rises tempted sellers back to the market.

The group said bad weather in February may have caused buyers to stay away, while numbers may also have been hit by people receiving their Christmas credit card bills and the end of the stamp duty holiday.

But the fall in demand, combined with a slight easing in supply, is likely to stoke concerns that the housing market recovery is running out of stream.

The shortage of homes for sale has been one of the key factors in helping to push up prices during the past year, but many economists predict they could resume their downward trend as more homes come on to the market.

The figures come the day after property website Rightmove said asking prices in England and Wales edged ahead by just 0.1% in March as large numbers of sellers returned to the market.

The Royal Institution of Chartered Surveyors also recently said the number of people selling their home rose quicker than the number of potential new buyers registering with agents for the second consecutive month during February.

But despite the fall in buyer numbers, the NAEA said the average number of sales agreed per estate agent still rose to 6.8 during the month, up from 5.7 in January. The proportion of sales made to first-time buyers remained broadly unchanged at 24%.

Gary Smith, president of the NAEA, said: "It's encouraging to see that the bad weather hasn't deterred agents from making sales this month even if it has stopped some house-hunters from registering with an agent."

The group admitted the fall in the number of house-hunters during February was likely to impact on the num

The Government also released figures today showing that house prices rose by 2.2% during January.

The rise pushed the average cost of a UK home up to £207,159, a level last seen in September 2008, according to the Department for Communities and Local Government (DCLG).

But while the figures suggest the housing market remained strong during January, the index tends to lag other measures, and so does not reflect the disruption to the market caused by the bad weather in January.

Figures from Nationwide and Halifax for February showed price falls of 1% and 1.5% respectively, which the groups attributed to buyers staying away from the market in the previous month.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The DCLG house price data seem at odds with most of the latest data and survey evidence which indicate that housing market activity and prices have faltered early in 2010.

"However, it needs to be borne in mind that the DCLG provides lagging evidence on house prices as the office calculates its index at the time when mortgages are completed.

"The lagging nature of the DCLG data means that it does not fundamentally alter our belief that house prices will be erratic and prone to corrections in 2010, and will probably be no better than flat over the year."