30
Oct
House prices higher than year ago
UK house prices were higher year-on-year in October - the first
annual rise for 19 months, the Nationwide has said.
Property prices were 2% higher in October than in the same month
the previous year, with the average home costing £162,038.
But the pace of monthly price rises has eased - going up by 0.4%
- and the building society said that values could plateau in the
autumn months.
This could be due to more sellers returning to the market, it
said.
Supply
The recent rises in house prices have been driven in part by the
lack of properties on the market, despite more people looking to
buy.
Month-on-month prices were up for the sixth consecutive month in
October, the Nationwide said, but it explained that a "more natural
level of stock" for sale could be coming onto the market.
The quarter-on-quarter data, considered a more reliable
indicator of house price movements, dropped slightly from 3.8% in
September to 3.4% in October.
"A moderation in the rate of house price inflation was to be
expected, as the very strong monthly increases seen over the summer
months were unlikely to be sustainable over the long-run," said
Nationwide's chief economist Martin Gahbauer.
He said the prices had jumped higher than consumer expectations
in recent months, which made a deceleration in price rises even
more likely in the near future.
Recession
The UK remaining in recession had mixed implications for the
housing market, Mr Gahbauer added.
A deeper and longer recession would lead to higher unemployment
and more constraint on workers' wages, which would put the brakes
on the recovery in the housing market.
However, it would mean that interest rates were likely to remain
at a record low "well into next year", he said, which would keep a
lid on repossession rates.
"Mortgage affordability will remain relatively favourable for
new and existing borrowers," he said.
This scenario would assist first-time buyers if they were able
to raise the deposit to secure a mortgage. Home loans have
gradually become a little more accessible and competitive in recent
weeks.
source: www.bbc.co.uk/news Friday 30th
October 2009