House price recovery edges ahead with 0.9% rise say Nationwide

Published 30th Jun 2009

House prices rose by 0.9 per cent in June, the Nationwide Building Society said today, fuelling hopes the property market is beginning to stabilise.

The average house price in June stood at £156,442, compared with £154,016 in the previous month.

While the monthly rise of 0.9 per cent is below the 1.3 per cent increase in prices for May, the measure of growth over three months revealed the first rise since December 2007.

In the three months to June, the average house price rose by 0.9 per cent, compared to a 0.4 per cent fall in the quarter to May.

However, while small signs of stability are beginning to emerge, the British housing market remains fragile. Yesterday, the Bank of England said a total of 43,414 mortgages were approved in May, just up from 43,191 in April. Analysts had expected a figure closer to 46,000.

In addition, the Bank said yesterday that mortgage lending during May rose by just £324 million, a third of the level in April and a tenth of the amount loaned at the same time a year ago.

The increase was the weakest since records began in April 1993.

Nationwide said that average house prices across the UK remain 9.3 per cent lower than a year ago, but said it was the first time since July 2008 that the year-on-year fall had been in single digits.

Martin Gahbauer, Nationwide's chief economist, said: "House prices have now risen in three of the last four months, suggesting that the improvement that began to show up in March represents more than just statistical noise.

"What is unusual about the recent trend reversal, however, is that it has taken place against a background of transactions activity that is still very low by historical standards."

Howard Archer, chief UK and European economist at IHS Global Insight, said house prices could still renew their slide but not by as much as the 10 per cent he had previously predicted.

He said the strength of an economic recovery, the employment market and the supply of properties, would be crucial over the coming months.

"We are still far from convinced that house prices have bottomed out and we certainly do not think that we are at the start of a renewed sharp upward trend," Mr Archer said.

"While buyer interest has clearly picked up markedly in recent months, this is only slowly translating into increased house sales," he said.

David Smith, senior partner, at Carter Jonas, a property consultancy, said: "Demand is by no means strong but it is getting stronger, influenced in part by the feeling that interest rates may soon be rising."

Source: ' Times '

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