House price cuts helped sales surge by nearly 10pc last month

The great house price stand-off, where vendors are reluctant to cut prices to levels at which buyers are willing and able to buy, may be about to end with a burst of activity. But will vendors or buyers blink first?

Property sales increased by 9.5pc last month as prices continued to drift 2.3pc lower over the last year, according to analysis of Land Registry figures by LSL Property Services, owners of estate agents Your Move and Reeds Rains.

David Newnes, a director of LSL, claimed: “It’s certainly not all doom and gloom for homeowners. Buyer activity is picking up as transactions have been much higher than we would normally expect at this time of the year.

“Increasing activity means buyers currently feel properties represent good value and that shows there is still plenty of confidence among both buyers and mortgage lenders that prices won’t plummet in the coming months. Add to that the fact that mortgage finance is currently cheaper than ever before, and there are plenty of positives to focus on when assessing the market.”

David Hollingworth of London & Country Mortgages was less bullish: “There are certainly two ways of looking at this from a homeowner’s perspective. On the negative side, prices appear to have fallen but on a positive note there is buyer demand with purchasers ready to go ahead when they feel they are getting the right price.

“We may now be seeing some vendors readjusting their expectations about what price they can realistically achieve. It appears that those vendors that are prepared to accept buyers’ offers are finding that the sale can go ahead.”

Bank of England base rate remaining frozen at 0.5pc for 31 months has helped support sales and prices, according to Stephen Smith, a director of Legal & General Mortgage Club: “Improved availability of higher loan to value deals is starting to help engender some movement in the housing market, and this may be making sellers feel that now is the time to strike a deal.

“Although the main high street lenders may still be restricting lending to those with larger deposits, a range of smaller building societies and specialist lenders have become active over the last few months.”

But housing turnover remains far below normal and Ray Boulger of John Charcol said it is too early to predict how the stand-off between buyers and vendors will end: “The market varies so much in different parts of England and Wales that there is no single pattern to the increased number of transactions.

“In some areas it is definitely a buyers’ market but elsewhere sellers have the upper hand. Furthermore, strong rental demand has pushed rents up to a level where rental yields are close to underpinning property values.”

Births, deaths and divorce – along with less dramatic factors such as moving to find work – prompt hundreds of thousands of property sales in a typical year. But many of these transactions have been put on hold since the credit crisis began. September's figures suggest that dam may be about to break but it is not yet clear whether this will be the start of a decisive downward movement in house prices.