House prices still going up
HOUSE prices rose 0.8 per cent in August, reducing the annual decline to 10.1 per cent, new figures from mortgage lender Halifax revealed yesterday.
This marks the second successive monthly increase and the fourth so far this year, supporting the now widespread belief that the UK housing market has stabilised.
More encouragingly, the less volatile three-month average showed that prices rose 1.7 per cent in the three months to August, the biggest increase in this measure since July 2007. The average price of a UK home stood at £160,973 in August, compared to £160,861 in December 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.”
However, while buyer interest has undoubtedly picked up, economists say that activity is still at a level that is consistent with falling prices.
Howard Archer from IHS Global Insight said: “While the Bank of England reported that mortgage approvals for home purchases rose to a 15-month high of 50,123 in July, those figures were still appreciably below the 70,000-80,000 that are generally seen as consistent with stable house prices.”
He added: “Given ongoing tight credit conditions, still relatively poor economic fundamentals and the fact that affordability ratios are moving back up now, we suspect that house prices are highly likely to suffer relapses over the coming months.”
At the end of last year many were predicting this year would be disastrous for house prices. Halifax predicted prices would fall by five per cent during the year, but others forecast falls of 15 per cent or more.