House prices rise for sixth successive month

Britain’s housing market continued to push forward last month as the average house price jumped by 1.2 per cent to £199,303, according to the Department of Communities and Local Government (DCLG). House prices recorded their sixth consecutive monthly increase as low mortgage interest rates and more affordable prices relative to the peak in 2007 combined to boost demand.

The annual rate at which prices are falling has also slowed, down to 4.1 per cent in September, the lowest annual decline for 13 months. Many economists believe that the recent house price mini-boom will turn to bust again as unemployment rises and wage growth slows. David Buik, an analyst for BGC Partners, said: “My big concern is that we will have a measurable correction around March or April of next year. At this point, the results of rising foreclosures and unemployment mean that house prices cannot continue to rise.”

IHS Global Insight, the economic and financial data group, predicts that house prices will fall by at least 5 per cent by the end of next year.   Data out today is expected to show that unemployment increased by 65,000 in the three months to September, taking the UK’s total to 2.5 million, or 8.5 per cent. The DCLG figures build on other positive data from Nationwide Building Society and Halifax, which recently reported 0.4 per cent and 1.2 per cent rises in house prices for last month, respectively. The figures come a day after data from the Royal Institution of Chartered Surveyors (RICS) showed that 34 per cent more estate agents had reported rising, rather than falling, prices in October. This compares with a balance of 21 per cent in September and is the highest level since December 2006. In London, the balance was 95 per cent.

Most economists have attributed recent monthly house price increases to a shortage of supply rather than to an increase in demand. However, the RICS survey indicates that sellers have begun to return to the market, with a balance of 15 per cent saying that the number of houses coming on to the market had increased last month, up from 5 per cent in September. However, supply remains at relatively low levels compared with recent years.

A RICS official said: “Although the supply of property is beginning to pick up, it is still insufficient to keep pace with the increase in demand, which points to further price gains in the near term.” Recent house price increases helped the value of goods sold on the high street to surge at an annual rate of 3.8 per cent last month, according to figures from the British Retail Consortium. Sales of furniture and flooring were particularly robust in October.

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House prices go up again, but fears grow that economy cannot sustain rise

The housing market rebound showed no sign of slowing in October, according to the latest figures, with prices rising by 1.2 per cent. Halifax said that the increase was the fourth consecutive rise by its measure. House prices are now 7.1 per cent higher than they were six months ago and 2.9 per cent higher than in December last year, the lender said. Prices in the three months to October were 2.9 per cent, or £4,667 higher than in the previous three months.

The surprise resurgence in house prices, to an average of £165,528, has brought the annual decrease to minus 4.7 per cent, compared with minus 17.7 per cent recorded in April, at the bottom of the market. The total fall from the market peak in August 2007 to the April trough was 23 per cent. Martin Ellis, Halifax’s housing economist, said: “Demand for houses has risen in recent months due to the very low level of interest rates, the decline in property prices since the summer of 2007 and a pick-up in consumer confidence on the back of better economic news. Higher demand has combined with a low level of properties for sale to result in rising prices.”

Halifax said that there were early signs that more people were beginning to put their homes on the market as conditions improved, a trend that economists have said could lead to a relapse in recent price rises. The ratio of house sales to the stock of unsold properties increased for the ninth successive month in September, indicating that homebuyers increasingly were turning towards property that has been on the market for longer in response to the lack of fresh stock.

Howard Archer, chief economist at Global Insight, said: “Personally, I’m sceptical that house prices can go on rising for much longer. That’s not to say that they will fall off a cliff — I just don’t think the economy is strong enough to sustain these increases. “A relapse in house prices will be even more likely if the recent firming trend leads to more properties coming on to the market, thereby moving the supply-demand balance away from vendors towards buyers.” Homebuilders pointed to the ongoing reluctance of lenders to offer mortgages as a key obstacle to a sustainable recovery.

The latest Bank of England figures showed that there were 56,215 mortgage approvals in September, up by 68 per cent on the previous year but 44 per cent lower than September 2007. Ian Baker, group managing director for housebuilding at Galliford Try Homes, said: “Greater availability of mortgage funding across the board is crucial and while housing starts are increasing and housebuilders are keen to build, the mortgage famine is a huge stumbling block in actually completing sales.” Estate agents are expecting a seasonal fall in transaction levels in the run-up to Christmas, but foresee improvements in the number of sales in the new year. Feeling the squeeze The Chartered Institute of Purchasing & Supply (CIPS) said yesterday that private residential housebuilding had increased for the second successive month, but it was the only sector of the construction industry to show a rise (Rebecca O’Connor writes). The index gave a reading of 46.2 per cent in October, down from 46.7 in September and the twentieth month of contraction in a row for construction companies. The decline came despite hopes that a rise in orders for public sector construction work would boost the outlook for building companies. Civil engineering construction fell at the fastest rate of decline for seven years, according to CIPS, while there was evidence of further redundancies at building companies. Costs also rose, amid higher fuel prices and an unfavourable exchange rate. David Noble, chief executive of CIPS, said: “Perhaps of most concern is the continued slashing of jobs at construction firms. The state of the sector means that many who have lost jobs will struggle to find something else before Christmas.”

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Home loan approvals rise 77% on last year

The number of mortgage approvals in September rose to levels last seen in early 2008, the British Bankers Association (BBA) said today, in a further boost to the UK housing market.

The number of loans granted for house purchase rose to 42,088, a 76.8 per cent rise on the same month last year and a 3 per cent rise on August.

However, the number of loans approved for remortgaging dropped by 10 per cent, down from 23,506 last month to 21,282.

The BBA said that remortgaging was less likely in the current environment, where reverting to lenders’ standard variable rates was often seen as more attractive than alternative mortgage deals.

David Dooks, statistics director at BBA, said: “Mortgage lending by the high street banks is continuing to improve from the lows seen earlier this year and the number of house purchase approvals continues to recover.”

However, he added that housing market activity would depend on more properties coming onto the market. The number of home loans approved was still 23.5 per cent lower than this time two years ago, before the credit crunch caused lenders to tighten their belts.

Earlier this week, Rightmove, the UK’s largest property website, said that sellers are now asking for an average 0.8 per cent more than they were in November 2007. Asking prices rose by 2.8 per cent last month — the fastest rate since February 2008.

Last week, the Royal Institute of Chartered Surveyors (RICS) also said that house prices in England and Wales had risen at their fastest rate since the credit crunch began, with 22 per cent more surveyors reporting price rises in the three months to September than price falls, up from 10 per cent in August.

But some commentators are concerned that the current house price recovery will be short-lived, and that it has been boosted temporarily by a shortage of stock.

Approval for equity withdrawal from residential property ticked up slightly, from 18,065 in August to 19,375, the BBA figures showed.

Commenting on the figures, Simon Rubinsohn, chief economist at RICS, said: “Although transactions in the housing market still remain way down on pre-credit crunch levels, the improving trend is indicative of a slight thaw in lending activity by mortgage providers.

However, the issue for first-time buyers still remains acute with substantial deposits being required to take that first step onto the property ladder. Significantly, the pick-up in demand coupled with a continuing lack of new instructions suggests that house prices will push higher over the coming months despite the latest bad news on the economy.”

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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 edge ahead, but only in the South

The average home in England and Wales is now worth £156,100, only 5.6 per cent less than a year ago, according to Hometrack, the property intelligence group.

The market continued to recover more quickly in southern regions than northern ones, with London and the South East rising the most, by 0.4 per cent and 0.3 per cent respectively. The South West and West Midlands also saw a slight growth, 0.1 per cent each, but the rest of the country stayed the same. Despite the overall growth, only 15 per cent of postcode areas saw an increase during September, with prices unchanged in more than four fifths of the country.

Related Articles House price rise is ‘false dawn’ warn economists Richard Donnell, Hometrack’s director of research, said the recent stabilisation in the property market was down to the shortage of property available. “While a lack of housing for sale is providing a support to prices, talk of a general improvement in properties and equities is leading to increased market confidence,” Mr Donnell said. “However, a fundamental imbalance still exists between supply and demand and question marks remain as to how long this situation can last and how resilient the market will be to changes in both levels of demand and sentiment.”

Separate research from the Association of Residential Letting Agents, Arla, found that the letting market is beginning to stabilise, with property oversupply decreasing across Britain and the number of new tenancies increasing. Almost a third of those surveyed felt supply and demand property was now in balance, compared with one in five last quarter. And in a further sign demand is picking up, more than four fifths of agents said they signed up 10 or more tenancies during the period, a rise of four per cent from the previous quarter.

Ian Potter, operations manager of Arla, said: “It gives further evidence to suggest that the property market as a whole is getting back on its feet. “This shift also indicates that confidence is rising among prospective tenants; it seems that people who delayed setting up home 12 months ago, now feel secure enough to proceed.”

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House prices rise 0.8% to fuel rebound hopes

House prices rose for the second month in a row during August, according to Halifax.

The mortgage lender said that prices in Britain rose 0.8 per cent last month, or down 10.1 per cent in the three months to August versus a year ago. The year-on-year drop is the lowest figure since July 2008. That left the average price of a home at £160,973 — broadly the level they were at the end of last year. Martin Ellis, housing economist at Halifax, said: “Demand for housing has increased since the start of the year due to better affordability and low interest rates.

This, together with low levels of property available for sale, has boosted house prices over the last few months” Related Links Bank urged to punish high-street lenders King’s ‘old iron fist’ missed the recession Bank figures show the first drop in consumer debt Halifax previously reported a 1.1 per cent rise in house prices in July, which was subsequently revised up to a 1.2 per cent advance.

Today’s data means that prices have now risen in three of the last four months. The lender said that housing market activity continues to improve, but remains less than half the level in mid 2007. Bank of England industry-wide figures show that the number of mortgages approved to finance house purchases — a leading indicator of completed house sales — increased for the sixth successive month in July. Approvals were 53 per cent higher than in July 2008, at 50,123, but were 55 per cent lower than in July 2007