House prices up for third month
House prices in the UK have gone up for the third consecutive month, rising 1.3% in July after a 1% rise in June, reported the latest Nationwide Building Society survey. Prices rose 2.6% in the three months through July, the largest increase since February 2007.
[UKPRwire, Thu Jul 30 2009] House prices in the UK have gone up for the third consecutive month, rising 1.3% in July after a 1% rise in June, reported the latest Nationwide Building Society survey. Prices rose 2.6% in the three months through July, the largest increase since February 2007.
Year on year, prices fell 6.2%, an improvement on the 9.3% year-on-year decline in June and the smallest annual drop since May 2008.
The average price of a property now stands at £158,871.
The increase was greater than the 0.2% predicted by economists and may be an indication that the UK housing market may be showing the first signs of recovery.
Nationwide’s chief economist, Martin Gahbauer, commenting on the figures in the survey, said “there is now a reasonable chance that prices could end the year slightly higher than where they started. Only a few months ago, such an outcome would have appeared unthinkable”. Gahbauer sees the current bounce in house prices as the result of pent-up demand re-entering the market following the government’s intercessions to strengthen the banking system. Also it seems that buyers are feeling a bit more confident in the market’s returning stability and are thus more likely to make a purchase now than at the end of last year.
The shortage in the supply of homes has been a chief factor in stabilizing house prices this year, even against the background of a recessionary economy and rising unemployment. However Gahbauer warns against the “impact over time of high unemployment, which has implications both for buyer confidence and the financial pressure on existing owners to sell. It is unlikely, therefore, that price increases can be sustained for long at the very strong rate observed over the last few months”.
This view was also expressed in a recent report from PricewaterhouseCoopers (PWC) which anticipates house prices continuing to fall for at least another 18 months.
Thus, while the market is moving in the right direction, the bounce in house prices over the past few months should not be expected to continue at the same rate, as wider economic conditions and market forces remain far from stable.
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