House prices continue to rise

Category: Mortgages
Date: 7/1/2009

House prices appear to be stabilising after the third monthly rise in the last four months in June.

Properties have recorded a rise of 0.9 per cent over the last four weeks, meaning the average property now has an asking price of £156,442, according to the Nationwide's monthly house price index.

Although these figures represent an annual decline of 9.3 per cent, it is the first time since July 2008 that the year on year fall has been in single digits. Trends in the mortgage market had suggested that the large scale losses seen last year would be replicated in 2009.

If the pattern of price movements over the first half of the year is repeated over the second half, the building society believes prices will show only a small single digit fall over 2009 as a whole.

Furthermore, the three month on three month rate of change, which is considered a smoother indicator of the short term price trend by experts, turned positive for the first time since December 2007. It currently stands at 0.9 per cent, up from a negative reading of -0.4 per cent in May.

"On balance, the stabilisation of house prices is a welcome surprise that did not seem likely at the beginning of the year," said Martin Gahbauer, the building society's chief economist.

"However, there are still considerable headwinds facing the demand side and until we see a more robust recovery in house purchase activity, it is too early to be confident about a full-scale recovery of prices."