More signs of house price rises

UK house prices rose for the third consecutive month in September and showed the first quarterly increase for two years, according to the Halifax.

The average home rose in value by 1.6% in September compared with the previous month, to £163,533.

And prices in the three months to September increased by 2.8% compared with the previous quarter.

The Halifax, now part of Lloyds Banking Group, said that increased demand and a lack of supply were key to the rise.

However, both could change and “constrain” prices in the coming months given the economic climate, said Halifax housing economist Martin Ellis.

Data divergence

The Halifax said that the annual change in prices showed that the value of the average home was 7.4% lower than September last year.

 

There are some signs that the improvement in market conditions is encouraging more people to put their properties up for sale
Martin Ellis, Halifax housing economist

This figure is based on a three-month average, but comparing September 2009 with September 2008 shows that prices were still lower than a year ago.

This marks a continued divergence between the figures provided by the Halifax, and those published by rival the Nationwide Building Society.

Last week, the Nationwide said that prices in September had returned to the same level seen a year earlier.

However, both agree that low interest rates and fewer properties on the market have been key to the “recovery” in prices.

“The marked improvement in affordability due to the reduction in both property prices and interest rates since mid-2007 has been a key factor in stimulating higher demand,” said Mr Ellis.

But he said these conditions could change.

“Continuing increases in unemployment and low earnings growth are likely to constrain the rise in demand,” he said.

“There are also some signs that the improvement in market conditions is encouraging more people to put their properties up for sale.

“This development could loosen market conditions by alleviating the current shortage of supply and curb the pace of house price growth evident in recent months.”

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