House prices fall for sixth month

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The average cost of a home in England and Wales has increased by just 0.4% during the past year to average £174,100, according to property information group Hometrack.

Prices continued their downward trend in March, falling by 0.2% during the month, with 29% postcode districts seeing a reduction in house prices.

The survey comes days after Nationwide Building Society said house prices fell for the fifth month in a row in March, dropping by 0.6%, while annual house price growth eased to just 1.1%, its slowest rate for 12 years.

The majority of house price indexes currently show price falls as the market suffers from a combination of stretched affordability and the credit crunch, which has led to lenders tightening their lending criteria and raising their rates.

Hometrack said levels of activity in the property market improved for the second month running, but the spring bounce seen in February did not continue at the same pace.

The number of new buyers registering with estate agents increased by 1.2% in March, well down on the rise of 7.9% seen in February, which had been the first increase seen since June last year. There was also a 4.6% rise in the number of homes coming on to the market during the month, but the increase was half the level seen in February.

The number of sales agreed increased by 8% in March, compared with a 20% increase during the previous month, but the average time a home takes to sell remained unchanged at 8.5 weeks and sellers are getting just 93.5% of their asking price.

Richard Donnell, director of research at Hometrack, said: "Some bounce-back in market activity was inevitable after what has been a prolonged period of weak market activity.However the growth in demand over the last two months is only a third of the level seen in previous years so the spring market is likely to be a non event this year.

"Continued uncertainty in the financial markets, affordability pressures and weak buyer confidence are all likely to suppress levels of market activity in the months ahead with pricing levels remaining under pressure."