Activity in the housing market bounced back during February, helping to put a brake on property price falls.
The number of people looking to buy a home increased for the first time in eight months, rising by 14.7 per cent, due to a combination of traditional seasonal factors and pent-up demand following a very weak second half of 2010, property intelligence firm Hometrack said.
The surge in demand helped to limit price falls in England and Wales to 0.2 per cent, the smallest decline for six months.
There was also a 7.5 per cent jump in the number of homes being put up for sale, the biggest monthly increase for three years, while agreed sales soared by 25 per cent during the month.
Richard Donnell, director of research at Hometrack, said: “This is the first increase in demand for housing for eight months and represents a mix of seasonal and pent-up demand feeding back into the market after a 20 per cent decline in buyer numbers over the second half of 2010.
“While the number of homes coming on to the market has grown by 7.5 per cent over February, the 25 per cent increase in sales agreed will further erode supply and support the continued decline in the rate of price falls.”
But the group said that while this would lead to improved price stability in the short term, the longer-term outlook for the housing market remained “finely balanced”.
It said demand would have the greatest impact on prices over the coming months, and while it expected the pick-up to continue during March, the timing of any interest rate rises would be critical.
The increase in new buyers during February helped to reduce the average time a home takes to sell for the first time in a year to 10 weeks.
The proportion of asking price that sellers achieved also improved for the first time in 12 months, rising to 92.4 per cent. But Hometrack said a growing gap was emerging between the housing markets in the north of the country and those in the south.
The average home now takes just 8.6 weeks to sell in southern regions, compared with 12.1 weeks in northern ones, reflecting the different balance between supply and demand.
Prices in London remained static during February, after dropping by 3.6 per cent during the previous seven months.
All other regions of England and Wales saw price falls, although these were lower than they had been in January in all areas apart from the North, where the rate of decline increased from 0.4 per cent to 0.5 per cent.
Earlier this week Nationwide said the housing market was continuing to “tread water” after reporting that prices edged ahead by 0.3 per cent during February.