Nationwide says house prices rose 5.9% in 2009

Published 31st Dec 2009

House prices rose for the eighth consecutive month in December and are now almost 6 per cent higher than a year ago, according to Nationwide, the building society, which warned that the market remains uncertain.

Prices rose by 0.4 per cent in the final month of the year, takiing the average house price in the UK to £162,103.

Martin Gahbauer, Nationwide's chief economist, said: “Few could have foreseen this development at the start of the year, when the near-term price trend was still pointing to a repeat of the double-digit annual decline experienced in 2008.

“Although house prices are still 12.2 per cent lower than their October 2007 cyclical peak, they have now rebounded by an impressive 8.9 per cent since their February 2009 trough.”

Today's figures mean that, even taking account of inflation, prices across the UK have risen by 68 per cent over the decade, the strongest performance on record.

During the 1990s, according to Nationwide figures, prices fell 14 per cent in real terms.

“Wales has been the top performing country over the 2000s; house prices have risen 82 per cent in real terms. This sharply contrasts with the 1990s, where Wales saw prices fall by 24 per cent in real terms," Mr Gahbauer said.

“England overall has seen the weakest growth over the 2000s of 65 per cent, although this has varied widely across the regions. Within England, Yorkshire and Humberside has seen the strongest growth, with prices rising 84 per cent in real terms, whilst the Outer Metropolitan region has experienced the weakest growth, with a 51 per cent increase," he said.

Mr Gahbauer said that, this year, pent-up demand after a 65 per cent drop in transaction numbers from peak to trough had been a significant contributer to the moderate monthly increases.

He said that cash-rich buyers had entered the market at a time of extremely low property supply.

However, December’s rise was lower than rises of 0.5 per cent in November and October.

Mr Gahbauer added that the outlook for 2010 remained uncertain.

Historically low interest rates and lower than expected unemployment rates have also helped to prop up the housing market.

Following the house price fluctuations of 2009, Mr Gahbauer said: “One should always be prepared for the UK housing market to surprise."

The Nationwide index is a further boost to homeowners following data from the Land Registry yesterday showing that house prices increased by 0.9 per cent in November.

In London, house prices were up 2 per cent on the previous month and 3.5 per cent on a year ago, the Land Registry data showed. The West Midlands was the only region where prices fell last month, recording a decrease of 0.4 per cent.

Land Registry figures are considered to be slightly behind the pace of other indices, because they are based on real sales rather than valuations.

However, a 10.6 per cent increase in the number of transactions over the year was a particularly encouraging sign for the housing market, property experts said.

Source: ' Times '

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