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House prices rise again

House prices rise again

Category: Mortgages

Updated: 27/01/2010
First Published: 29/05/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
House prices rose for the second time in three months in May, providing further evidence of improvement in the UK property market.

The average price increased by 1.2 per cent this month compared to April, meaning a typical home now costs £154,016, up from £151,861, according to figures released by Nationwide.

As such, the annual rate of decline has improved markedly, from -15 per cent to -11.3 per cent. The average price of a property in the UK 12 months ago was £173,583.

In the last three months, prices have dropped by just 0.5 per cent, a vast improvement on the previous three months, when a decline of three per cent was evident. In fact, the three month rate of change is currently at its healthiest level since January 2008.

Experts think the improvement in the ratio of sales to unsold stock – indicating levels of supply and demand – has had at least some bearing on the recent stabilisation of property prices.

Chief economist at Nationwide, Martin Gahbauer tempered talk of a sustained revival, pointing to historic precedents, rising unemployment and tight access to credit, but conceded that the decline appears to be slowing somewhat.

"Although the short term trend in house prices have clearly improved from where it was at the beginning of the year, it is still too early to say the market is turning definitively," he commented.

"During the downturn of the early 1990s, there were many months during which house prices rose, only to fall back down again in subsequent months.

"Nonetheless, the improvement in house price trends is consistent with signs of stabilisation in several other economic indicators and suggests that any further price declines may occur at a less rapid pace than in 2008."

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