House prices moderate to 0.5% rise

Published 01st Dec 2009

British house prices rose 0.5 per cent in November, at the same rate as October, suggesting that rapid rise over the spring and summer is beginning to moderate.

According to Nationwide, the mortgage lender, while month-on-month growth was 0.5 per cent, the rate measured over three months is beginning to decline - from 3.8 per cent in the quarter to September, to 3.5 per cent in October and 2.8 per cent in the three months to November.

Martin Gahbauer, Nationwide's chief economist, said: "This suggests that houseprices are now rising at a more moderate pace than in the spring and summer months, when they experienced a very strong bounce from early 2009 lows."

The average British property is now worth £162,764 - roughly the same as in early 2006 but 2.7 per cent higher than 12 months ago. Last month, Nationwide reported the first 12-month rise in house prices since March 2008.

Mr Gahbauer added: “The outlook for the housing market remains crucially dependent on labour market conditions, and here recent developments have been somewhat more encouraging than might have been expected.”

The rise in unemployment has not been as rapid or pronounced as previously feared, he said, despite Britain suffering its longest and deepest recession since World War II.

He said this was because many employers have opted to reduce working hours and pay rather than make redundancies.

Though Mr Gahbauer warned the trend may not be sustainable, particularly if public sector jobs start being lost when the Government makes cuts from next year onwards.

“Together with the fact that mortgage rates have fallen sharply as a result of base rate cuts, this has meant that far fewer borrowers have fallen into arrears than would normally be the case in such a deep recession,” Mr Gahbauer said. “As such, the downward pressure on house prices from distressed sales has so far been significantly lower than expected.”

The percentage of borrowers in arrears has even edged down in the most recent quarterly figures, he said.

Source: ' 'Times' '

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