A shortage of new homes for sale has ended house price falls, according to figures published today, adding weight to claims that the market has begun to stabilise.

Hometrack, the housing market analyst, said that the average house price stayed the same from April to May at £155,600, the first time in 20 months that its survey has not shown a month-on-month decline in prices.

While less positive than the 1.2 per cent price rise recorded by Nationwide over the same period, the latest figures support the view that the pace of decline is at least slowing, boosted mostly by an increase in demand relative to a lack of supply.

Hometrack said that the number of buyers registering with estate agents was up 21 per cent in the three months to May, while the number of new properties listed increased by only 2.5 per cent.

The average time for a property to stay on the market fell from 10.4 to 9.9 weeks from April to May, while the percentage of postcodes where there had been a price decrease over the past month fell from 32 per cent to 13 per cent.

“Aggressive re-pricing” by estate agents was behind an increase in the percentage of the asking price that sellers could hope to achieve, up from 89.6 per cent to 90.3 per cent, Hometrack said.

It added that, despite these indicators, the outlook for the housing market remained fragile.

Mortgage and house price data out this week from the Bank of England and Halifax are expected to show a slight increase in mortgage approvals and further evidence that house prices are stabilising, but that the market is still operating at depressed levels.

Richard Donnell, director of research for Hometrack, said: “Overall levels of market activity are well down on what would constitute normal market conditions. The willing purchasers that are returning are largely confined to the more wealthy areas of the country and limited to those buying with cash or who require low loan-to-value mortgages.”

Rightmove, the property website, said that, while investors were hunting for bargains in the South, the same trend had not emerged as strongly in the North, despite higher numbers of repossessions there.

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