Nationwide: House prices up 0.9% in June

Permalink: Nationwide: House prices up 0.9% in June
by Kay Murchie

For the third time in the last four months, UK house prices have risen according to the latest survey from the Nationwide building society.

According to the building society, house prices crept up by 0.9% in June and take the annual rate of decline to 9.3%, from 11.3% last month.

The lender puts the average cost of a home at £156,442 - more than £15,000 less than this time last year.

The news will be a further indication that the housing market is recovering, albeit slowly. Yesterday, housing intelligence group, Hometrack, reported that house prices in England and Wales held steady for the second consecutive month in June, putting the average cost of a home at £155,600.

However, Hometrack cautioned that strong demand from buyers is continuing to outstrip the shortage of houses on the market.

Meanwhile, the Nationwide said a better indicator of short-term trends was to compare the average price for the past three months with that for the previous three. On that basis, prices were now 0.9% higher, the first time they have been on an upward trend since December 2007.

Commenting on today’s figures, Nationwide’s economist Martin Gahbauer, said: “House prices have now risen in three of the last four months, suggesting that the improvement that began to show up in March represents more than just statistical noise.”

“What is unusual about the recent trend reversal, however, is that it has taken place against a background of transactions activity that is still very low by historical standards,” added Mr Gahbauer.

According to the building society, if the trend continues for the remainder of the year, prices would only have fallen in “single digits”.

This would represent a major u-turn in the market. Many commentators were predicting further declines throughout 2009.

However, the fact remains that without a significant deposit, mortgages are still difficult to secure.

The Bank of England yesterday reported that net lending figures were at their lowest level since April 1993 - at £324 million. This figure is just a third of that recorded in April and well below the six-month average of £1.1 billion.