House prices partially bounced back in October following heavy falls in value in September, but the long term picture remains shaky. Prices rose by 1.8% in the month, rebounding somewhat from a 3.7% decline in September.
Despite the gains made in October, the third quarter of the year saw a negative trend in house prices, with values down by 1.2%.
At the end of October, the average price of a home in the UK was £164,919, a figure that was up by 1.2% on the same month last year, but this has fallen steadily in the year, from a high of 6.9%.
The housing market has had a mixed year, with a combination of rises and falls throughout 2010, although the falls have never threatened to match those seen in 2008, when quarterly declines of 5% were recorded during the second half of the year.
While prices remain more than £10,000 above the April 2009 trough, housing market activity is softening.
Bank of England industry-wide figures show that the number of mortgages approved to finance house purchases – a leading indicator of completed house sales – fell for the fifth consecutive month in September. The number of approvals in quarter three was 3% lower than in quarter two.
"An increase in the number of properties available for sale in recent months, together with a decline in demand, has put some downward pressure on prices in recent months," said Martin Ellis, housing economist.
"We do not believe that prices are set to fall sharply over a sustained period. Interest rates are likely to remain very low for an extended period, which will continue to support the improved mortgage affordability position for homeowners.
"Low rates and stable employment levels are benefiting homeowners."
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