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House prices could rise by 10% a year, Nationwide says
The rate of house price increases could soon rise above 10% a year, the Nationwide building society has said. Read More
Property sales hit two-year high
Further evidence of the recovery in the UK housing market has come from figures showing completed residential property sales hit a two-year high in December. Read More
House prices rise as property shortage persists
House prices are still being driven up by a relative shortage of properties for sale, says the Royal Institution of Chartered Surveyors (Rics). Read More
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. Read More
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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.
Nationwide's chief economist Martin Gahbauer: 'It's a really big surprise'
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 level out 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.
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said that the imminent end of the stamp duty holiday would slow the market recovery.
'At a time when first-time buyers are still struggling to access mortgage finance and, in most cases, reliant on hefty support from parents to take an initial step onto the market, the risk is that the move to end the holiday could arrest the tentative improvement in turnover,' he said.
He pointed out that the average property was still worth 13% less than at the peak of the market in autumn 2007.
Seema Shah, property economist at Capital Economics, said: 'The upturn in house prices already appears to be losing momentum.
'With the housing market still overvalued, activity still at levels which would normally result in falling prices, and unemployment still rising, we expect house price falls to resume in 2010.'
From the BBC website:
http://news.bbc.co.uk/1/hi/business/8332861.stm