Third rise for house prices
HOUSE prices rose for the third month in a row in July in a further sign of stability for the UK property market, putting the average price of a UK home at £158,871.
The Nationwide monthly survey showed a rise of 1.3 per cent on a seasonally-adjusted basis while the smoother quarter-on-quarter measure rose 2.6 per cent in July. The annual rate of decline has now eased to -6.2 per cent in July from June’s -9.3 per cent.
Martin Gahbauer, Nationwide’s chief economist, said that the sharp decline in transactions during 2008 produced a pool of prospective purchasers who able to buy in principle, but did not want to do so in the uncertain conditions. A restabilisation of the banking system meant “some of this pent-up demand re-entered the market, with the added assistance of very low interest rates”.
Howard Archer at IHS Global Insight said: “This further rise in house prices will obviously fuel speculation that the housing market has turned decisively as it has benefited in recent months from sharply reduced mortgage interest rates and the substantial fall in house prices from their 2007 peak levels.”
The stabilisation in the property market has also been down to the shortage of properties available for sale this year and only 100,000 homes are expected to be built during 2009, the lowest level on record.
Nationwide’s Gahbauer said: “As it is likely to take time for the economy and housing construction to recover to pre-crisis levels, the potential exists for a considerable housing shortfall to develop over the next few years.” With demand outstripping supply, prices are likely to be well supported.