Overall house prices rose by 0.1% in January while the year on year rate of grow currently stands at -0.1, property group Hometrack reports.

January’s survey reveals a sluggish start to the year as the market shrugs off the usual seasonal effects after an unexpectedly strong end to 2009.

January saw a decline both in the number of new sales agreed and in buyer registrations – the average time to sell posted its first monthly increase for 12 months, growing to an average of 8.6 weeks.

The volume of housing for sale also continues to decline and this has been a key factor in supporting price rises. During January, prices rose in three regions of the country – Greater London, the South East and the South West. Prices remained static in all other areas.

The average price of property in rising markets – and these represent just 7% of postcodes – is 35% higher than that of the national average (£212,000 compared to £157,000). This highlights how pockets of the market, where scarcity of supply and equity fuelled demand, are creating upward pressure on prices. The firmer pricing in the market today may well deter continued interest.

Transactions skewed in favour of higher value property in better off areas…
High value property in better off areas is resulting in a skew in transactions. This in turn has led to the general health of the housing market being overstated especially when set against the backdrop of an economy emerging out of recession. The market bounce-back of 2009 was distinctly one dimensional and the outlook for 2010 is less certain.

Richard Donnell, Director of Research, Hometrack added: “Improvement in both market activity and prices over 2009 means we are starting 2010 from a higher base than 12 months ago. Today the proportion of the asking price being achieved is 93.5% compared to 88% at the start of 2009.

The headline measures of housing affordability may have been boosted by low mortgage rates, but access to equity as a means of funding purchases, is proving a major constraint to those looking to get on the ladder or trade up.

This, together with wider economic factors and the prospect of a May election will add to the uncertainty in the near term and is likely to suppress market activity.

The market built up a head of steam over 2009 in some – but not all – areas, boosting sentiment. Weaker demand and the fact we are starting from a higher base than a year ago means the outlook for 2010 remains far from certain.

The Hometrack survey is the largest monthly survey and provides the latest insight into market trends right across the whole market – in areas of both high and low levels of activity. “