Property website Rightmove's monthly index published today says that a 1.9% fall in asking prices between December and January is consistent with the market bottoming out in the latter part of 2009.
The index shows that the number of new vendors had more than halved from 89,000 last January to 43,000 this month, while there had been 429,560 buyer inquiries in the first two weeks of January, compared with 199,762 over the same period in 2008.
'The speed with which prices have declined has been worrying, but it does mean we are potentially reaching the bottom sooner,' said Miles Shipside, commercial director of Rightmove.
'One of the factors that will help to arrest price falls is a lack of property coming onto the market. The reticence of discretionary sellers to come to market and the relatively low number of forced sellers have seen new listing numbers plummet,' he added.
'Add to this the collapse in the supply of new homes from developers and a massive shift of unsold stock to the lettings market and the result is a dramatic reduction in the over-supply that has been present since early 2008.'
The total number of resale properties advertised on the website has decreased by over 20% since the peak in May 2008, giving potential buyers a far more restricted choice.
This year could result in good deals for buyers. 'The market has plumbed the depths, with agents reporting sales being achieved at a discount of around 25% from peak boom prices. The reduction in the number of properties coming to market appears to be aligning supply and demand more quickly than in previous downturns,' explained Shipside.
But he warned; 'This is only one step on the road to recovery. Restricted lending criteria and continuing economic woes mean that a bump along the bottom in both price and volume will extend into 2010.'
It is also not guaranteed that the higher level of enquiries will turn into more successful completions. 'However, those that have the savings to shop around for better mortgage deals have the advantage of being in a market where there is a combination lower house prices, cheap finance and the likelihood of quality properties in forced sales,' he said.
'These buyers should be researching their local market and should be employing tactics to secure the best deal available in their area. In tough times buyers should always look for quality, but also look to pay bottom price. The quality properties in desirable locations will always bounce back first when a recovery happens, and a depressed market is an opportunity to secure a quality home that would normally be out of budget,' he added.
