The number of applicants registering with agents also rose from -0.5% in May to 1.9% in June.
The improvement in sales volumes is largely the result of a bounce back in activity following a subdued May market. But it also a reflection of lower prices and greater realism by sellers over achievable pricing levels.
Agents are keen to ensure prices are at a level where transactions can take place to support revenue. Greater realism by sellers is supporting sales but volumes are only half the story and pricing levels remain under downward pressure. Average prices fell by 0.1% in June.
The supply of homes for sale continues to grow well ahead of demand although at the same time improved sales volumes are eroding the stock of property for sale. The number of properties for sale on agents’ books grew by 3.5% in June following a 3% increase in May.
Looking across the first half of 2011, the housing market is holding up better than many had expected albeit at low transaction levels.
Average prices may have slipped back by 1% over the first half of the year, but sales volumes have increased as demand has improved and sellers become more realistic about the prices they are able to achieve. That said average prices today are 3.9% lower than at the same time last year.
At a local level the market remains highly polarized with the average time on the market ranging from a low of 6 weeks in London to 14 weeks in Wales.
It is the demand side of the equation that has the greatest impact on market activity and pricing. Supply has grown by a broadly similar amount across all regions in the first 6 months of the year yet the expansion in demand has been far more varied over this period.
Richard Donnell Director of Research at Hometrack, said:
“The first 6 months of 2011 have seen the housing market holding up better than many had expected. Low transaction volumes, low mortgage rates and forbearance by lenders limiting the number of forced sales have all played their part.
"While average prices have slipped back by 1%, sales volumes have increased off the back of higher demand and greater realism over achievable prices on behalf of sellers.
"That said, the market continues to be highly polarized with a wide differential between London and the rest of the country. This is evidenced by the time to sell which ranges from a low of 6 weeks in London to 14 weeks in Wales.
"The second half of the year is set to see subdued demand keeping a further downward pressure on prices. Overall we still expect headline house prices to be down by 2% over 2011.
"The latest survey of over 5,000 agents and surveyors across the country reveals how the housing market has posted something of a turnaround over June with the volume of sales agreed by agents rising by 10.6%. This is the highest monthly increase since March 2011 (12.6%) and is significantly higher than the 1.5% increase in sales registered in May.
"On the face of it this trend appears to be at odds with the wider economic picture of weak consumer confidence and increasingly stretched household incomes. However the improvement in sales volumes is only half the story.
"While turnover has increased, average prices remain under downward pressure, falling by a further -0.1% over June. Average prices today are 3.9% lower than at the same time last year.
"With estate agents keen to maintain sales volumes to support revenue, the improvement comes as welcome news in the face of the traditional seasonal slowdown. The number of applicants registering with agents grew by just 1.9% in June, and while an improvement on the -0.5% fall in May, it is unlikely that there will be any material increase in demand over the summer.
"On the supply side it is clear from this and other recent surveys that the number of homes coming to the market continues to rise. The number of homes for sale on agents’ books grew by 3.5% over June following a 3% increase in May.
"While the balance between supply and demand is not significantly out of kilter, subdued demand and weak consumer confidence are set to keep headline prices under modest downward pressure over the months ahead.
"The fact that agents are succeeding in getting sales agreed with only modest price reductions means that there is little change being seen in the time on the market or the proportion of the asking price being achieved.
"The average time on the market is holding steady at 9.7 weeks compared to 10.2 weeks at the start of the year. Equally the proportion of the asking price being achieved is 92.8% compared to 91.9% six months ago.
"On a regional basis prices remain under greatest downward pressure in the markets where supply and demand are most out of kilter and this is reflected in the average time on the market. London and the South East have seen the strongest expansion in demand while Yorkshire and Humberside and Wales have seen the lowest increases.
"There has been a more consistent growth in supply across all regions over the first half of the year. In the markets where supply and demand are most out of kilter so pricing is set to remain weak.”
