House prices rebound to September 2008 levels

Nationwide has announced that UK house prices are now at the same level as a year ago. In its latest review of the market, the lender found that the average value of a home rose by 0.9% in September, marking the fifth consecutive monthly increase and taking the year-on-year rate of change out of negative territory for the first time since March 2008.

The average property price now stands at £161,816, compared with £160,224 in August, according to Nationwide. The three-month-on-three-month rate of change, which is generally regarded as a smoother indicator of the near-term trend, rose from 3.3% in August to 3.8% in September, attaining its highest level since August 2004. The building society’s chief economist, Martin Gahbauer, comments: “Over the first nine months of 2009, the seasonally adjusted index of house prices has risen by 4.1%, though relative to the October 2007 peak it is still down by 13.5%.” He adds: “The further increase in house prices is very much consistent with improvements in a broad range of economic and financial indicators over the last few months, all of which suggest that the most intense phase of the recession and financial crisis has probably passed.”

However, Mr Gahbauer also describes the market as facing “considerable headwinds”, as unemployment rises and restrictive credit conditions continue. In addition, low transaction levels and the end of the stamp duty holiday could mean that further significant price rises are unlikely in the months ahead.

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