7
Oct
More signs of house price rises
UK house prices rose for the third consecutive month in
September and showed the first quarterly increase for two years,
according to the Halifax. The average home rose in value by 1.6% in
September compared with the previous month, to £163,533. And
prices in the three months to September increased by 2.8% compared
with the previous quarter. The Halifax, now part of Lloyds Banking
Group, said that increased demand and a lack of supply were key to
the rise. However, both could change and "constrain" prices in the
coming months given the economic climate, said Halifax housing
economist Martin Ellis.
Data divergence
The Halifax said that the annual change in prices showed that
the value of the average home was 7.4% lower than September last
year. This figure is based on a three-month average, but comparing
September 2009 with September 2008 shows that prices were still
lower than a year ago. This marks a continued divergence between
the figures provided by the Halifax, and those published by rival
the Nationwide Building Society. Last week, the Nationwide said
that prices in September had returned to the same level seen a year
earlier. However, both agree that low interest rates and fewer
properties on the market have been key to the "recovery" in
prices.
"The marked improvement in affordability due to the reduction in
both property prices and interest rates since mid-2007 has been a
key factor in stimulating higher demand," said Mr Ellis. But he
said these conditions could change. "Continuing increases in
unemployment and low earnings growth are likely to constrain the
rise in demand," he said. "There are also some signs that the
improvement in market conditions is encouraging more people to put
their properties up for sale. "This development could loosen market
conditions by alleviating the current shortage of supply and curb
the pace of house price growth evident in recent months."
Future picture
Prices have risen from their trough in April 2009 by 5.9%, the
equivalent of an average price rise of just over £9,000, the
Halifax said. Prices were 1.7% - or £2,672 - higher in
September than at the start of 2009. Despite the low number of
properties up for sale, housing market activity has picked up from
a low level during 2009. Figures from the Bank of England have
shown mortgage approvals for house purchases - a good indication of
future sales - have risen through most of the year. However,
mortgage approvals dipped slightly in August and were still well
down on a year ago, which added to evidence that the recent revival
in the property market may have reached a plateau. The Land
Registry recently said that house prices in England and Wales fell
very slightly in August. Prices dropped by 0.1%, or £202, from
July to take the average home price to £155,968. That was 9.4%
lower than in August 2008. Despite this, low interest rates mean
home loans are still relatively affordable, the Halifax said. In
the third quarter of 2009, the typical borrower devoted 30% of
earnings to mortgage payments - compared with the 37% average of
the last 25 years.
BBC News. (2009). More signs of house price rises. [Online].
Available from: http://news.bbc.co.uk/1/hi/business/8292156.stm
Accessed 7th October 2009