The survey from Hometrack highlights continued improvement in both levels of demand and transactions, although prices are likely to remain under pressure over the coming months.

‘Some bounce back in market activity was inevitable after what has been a prolonged period of weak market activity,’ says Hometracks director of research Richard Donnell.

‘However, the growth in demand over the last two months is only a third of the level seen in previous years, so the spring market is likely to be a non-event this year,’ he adds.

Demand for housing still exists, but the majority of households simply do not need to move. This has resulted in major declines over the last six months and Hometrack continues to forecast a 17% drop in transaction volumes this year.

Jennet Siebrits, head of residential research at CB Richard Ellis Residential, believes improved financial market stability and lower interest rates should buoy residential demand later this year or early in 2009, ‘although we expect the softening of the market to continue for as long as the general economic uncertainty remains. In the coming months much will depend on consumer sentiment, a key driver of demand.’

With rising repossessions and disillusioned buy-to-let investors cutting their losses on city centre flats, we hae seen certain sectors taking a significant knock, points out Robert Bryant-Pearson, chief executive of Allied Surveyors.

‘We expect the spring to bring increasing demand and good suburban houses will enjoy a bounce back, but cuts in City bonuses will injure higher value property prices and recently built flats are likely to remain in the doldrums for another 18 months,’ Mr Bryant-Pearson believes.