UK house prices rise for third straight month
UK house prices rise for third straight month
By Daniel Pimlott
Published: July 30 2009 08:03 | Last updated: July 30 2009 08:03
House prices in the UK rose by 1.3 per cent in July, according to the latest figures from Nationwide, taking the rate of growth over the last three months to its highest level in more than two years and adding to signs that the housing market is bottoming out.
Prices rose for the third month in a row, the Nationwide index showed, following increases of 1 per cent in June and 1.3 per cent in May. The three-month-on-three-month rate of change reached 2.6 per cent, the highest since February 2007.
The Nationwide index has shown growth in four out of the last six months, and signs of stabilisation in the housing market are backed up by other surveys, although Nationwide has been the most positive. The Halifax index has shown intermittent growth this year, while the Land Registry index, which lags Halifax and Nationwide by several months, rose for the first time in almost 18 months in June.
For the first seven months of 2009 as a whole, prices rose by a cumulative 1.3 per cent, suggesting 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,” said Martin Gahbauer, Nationwide’s chief economist.
But many economists are sceptical that the run of good news on house prices will continue. Although mortgage approvals for homes have risen sharply, they remain below the levels that many think are consistent with rising prices. Furthermore the Royal Institute for Chartered Surveyors has said that although demand for housing has risen sharply, house prices appear to be being supported by a lack of supply as wary sellers keep their properties out of a depressed market. Finally, with unemployment expected to continue to rise, demand for house purchases may well ebb later in the year.
Mr Gahbauer said that the rise in prices came as pent up demand that had been held back during the worst of the crisis last year was reaching the market. “Although the resulting rise in transactions has not been that dramatic, it has been enough to produce an upward bounce in prices because it coincided with very low levels of supply on the market,” he said. “If prices continue to increase at the rate of the last three months, they would soon rise to levels that would be noticeably out of line with earnings, rents and other fundamental determinants of housing valuations… It is unlikely, therefore, that price increases can be sustained for long at the very strong rate observed over the last few months.”
