'Surprise bounce' in house prices

Published 02nd Apr 2009

House prices rose in March for the first time since October 2007, according to the Nationwide.

The building society said that property prices increased by 0.9% compared with the previous month.

That reduced the annual rate of house price falls from 17.6% in February to 15.7% in March, with the average UK home costing £150,946.

Nationwide described the change as a "surprise bounce" and warned against concluding the market had turned.

"While the rise in prices in March is welcome, it is far too soon to see this as evidence that the trough of the market has been reached," said Fionnuala Earley, Nationwide's chief economist.

She added that cuts in interest rates and the Bank of England's move to expand the amount of money in the system - known as quantitative easing - would take time to work through into the housing market before there was a "sustained" recovery in house prices.

Signs of recovery?

Ms Earley said that the significant slowdown in falling prices year-on-year was distorted by the sharp decline in the market last year.

Nationwide's figures show that prices of flats have been more volatile than other types of properties.

The figures come shortly after the Bank of England reported that mortgage approvals for house purchases in Britain rose more than expected in February.

The rise in mortgage approvals by all lenders - to 38,000 approvals in the month, up from 32,000 in January - is a good short-term indicator of actual lending and suggests this may now pick up.

Recent surveys from the Royal Institution of Chartered Surveyors (Rics) have shown rising interest from prospective buyers.

Earlier this week, Bank of England data showed approvals for new mortgages hit 38,000 in February, their highest in nearly a year.

Simon Hayes, economist at Barclays Capital, said that thanks to "the improvement in mortgage approvals and the rise in buyer enquiries that Rics has been showing, there are tentative indications the housing market may be stabilising".

Source: ' BBC '

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