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.”


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.

House prices rise for fourth month in row

House prices rose at their fastest rate in more than two and a half years in August, the fourth straight monthly rise, figures from Nationwide Building Society showed.

Published: 7:00AM BST 27 Aug 2009 (Daily Telegraph)

The average cost of a home in the UK jumped by 1.6 per cent during the month as a shortage of homes for sale bolstered prices, according to the Society. The annual rate at which prices are falling also continued to ease during August, narrowing to just 2.7 per cent, down from 6.2 per cent in July.

The group said prices were now 3.2 per cent higher than at the beginning of 2009 at an average of £160,224, although it added that they were still 14.4 per cent below their peak in October 2007.

Martin Gahbauer, Nationwide’s chief economist, said: ”The exceptionally low level of interest rates offers some explanation for why house prices have not repeated the very sharp falls of 2008.” He said low interest rates had fed through into lower mortgage repayments for existing homeowners, making it easier for people who lost their jobs to continue to afford their home loan.

As a result fewer people have been forced to sell their home as is normally the case during a recession, and this has contributed to shifting the balance of supply and demand in favour of sellers during 2009. Low interest rates have also helped make property more affordable for first-time buyers, boosting demand, despite the ongoing problems in the mortgage market. But Mr Gahbauer warned that when interest rates did start to rise again it could make the recovery in the housing market ”bumpier” than might be expected following the recent run of price rises.

The latest figures on the property market come just days after the British Bankers’ Association said the number of mortgages approved for house purchase had risen to a 17-month high during July. The Council of Mortgage Lenders also reported a 26 per cent rise in mortgage lending in July to its highest level for nine months, as buyers continued to return to the market. But despite the recent pick up in housing transactions, economists have warned that the number of homes changing hands still remains well down on normal levels.

The ongoing problems in the mortgage market are also continuing to limit the number of people getting on to the housing ladder, despite some recent signs that lenders are beginning to loosen their lending criteria. As a result, it is thought any recovery in the housing market is likely to be gradual, with some commentators warning that further price falls cannot be ruled out.