The number of agreed house sales jumped sharply this month as sellers dropped their prices to shift homes which have been lingering on the market, a study said today.
Overall, house prices drifted lower in October, with a 0.1 per cent fall for the third month in a row, despite a slight increase in the number of new buyers registering with estate agents, property analyst Hometrack said.
Prices were flat in London and fell across the rest of England and Wales. The West Midlands saw the biggest price fall with a 0.5 per cent drop, but it also recorded the second biggest increase in sales.
The number of agreed sales rose by 9.2 per cent across the country in the strongest uplift seen since the spring, with Wales and West Midlands seeing strong sales increases of 18 per cent and 17.6 per cent respectively.
Hometrack said it expects estate agents to continue pushing through as many sales as possible towards the end of the year as demand from buyers tails off.
Richard Donnell, director of research at Hometrack, said the big jumps in sales were mainly down to sellers re-pricing homes that have been on the market for a while to a level where sales can take place, rather than a significant increase in demand from buyers.
Mr Donnell said that year-on-year, house prices are currently registering the lowest level of price falls for two years, with a 0.4 per cent drop.
This was put down to a strong spring market, when the ending of a stamp duty concession for first-time buyers prompted a rush of sales, as well as prices starting to firm up in the northern regions.
Mr Donnell said that stamp duty rates are acting as a barrier to “much-needed” sales and any recovery in the housing market will hinge on how well household incomes recover.
He said: “The foundation of any national and sustainable recovery in the housing market rests on growth in the wider economy and household incomes.
“Any recovery will most likely start to be seen in transaction volumes rather than prices.”
According to Land Registry figures released last week, house sales have been lower in recent months than they were a year ago, with just over 52,300 sales a month on average between April and July this year, compared with almost 55,000 sales a month during the same period in 2011.
The Government launched an £80bn scheme at the start of August to kickstart lending which has increased mortgage availability, although lenders have also toughened their borrowing criteria in recent months.
Mr Donnell said: “In the short term we expect the current trends to continue, with demand likely to slow down in the run-up to the year end.”
The number of buyers registering with estate agents increased by 0.3 per cent in October following four months of falling demand, but the study said this was driven by a 3.9 per cent jump in London.