…but activity is growing as cheap deals draw out buyers.

A rush by homeowners to put properties on the market ahead of the introduction of Home Information Packs (Hips) has pulled down the average of cost of a house which has fallen for the third month in a row.

According to figures out today from Rightmove, the property website, house prices are rising at their slowest rate for two years.

Almost £2,000 was wiped off the average value of a home in England and Wales during the five weeks to January 12, as prices dropped by 0.8 per cent to £230,428.

At the same time, annual house price inflation continued its downward trend, sinking to 3.4 per cent, its lowest level since December 2005.

However, Rightmove said there were signs this month of a recovery in the market as homeowners had rushed to put their homes up for sale ahead of the December 14 deadline for the introduction of Hips for properties with one and two bedrooms.

It said that this surge had reduced the average cost of a property on the market.

The company added that there had been a “marked increase” in activity and prices immediately after the new year as a result of lower prices and falling interest rates.

Miles Shipside, the commercial director of Rightmove, said: “Some homebuyers are now able to find properties that have fallen into their affordability zone, and are bagging what they see as bargains against previous prices.

“Some properties have had their prices dropped by 10 per cent or more and are now within reach, satisfying some of the pent-up demand from previous disenfranchised buyers.”

The amount of time a property remains on the market came down slightly this month to 95 days, down from a peak of 98 days in December.

Dominic Walsh

View story at Timesonline

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