According to the latest press release from Nationwide, house prices went up by a further 1.6% in August.  This is the fourth consecutive monthly rise cited by the building society, which now puts the average house price at £160,224 & around £10,000 pounds more than in Januarys report.  The 3 month on 3 month rate of change, which is generally a better indicator of the current trend, rose from 2.7% in July to 3.3% in August & this is the highest level cited by the Nationwide since February 2007.  The average house price, however, is still slightly lower than 12 months ago.

Commenting on the figures, martin Gahbauer, Nationwides chief economist stated that he thought that interest rates were likely to stay at a very low level well into 2010. He also talked about what he saw as the main reason why most people were able to hang onto their homes during this recession: "Before the MPC began cutting rates, the average interest and principal payment per mortgage holder represented about 38% of the average post-tax labour income.  Following the steep cuts in base rate, this has fallen to just 28% of post-tax income, despite historically high levels of outstanding mortgage debt."

Mr Gahbauer rounded off his commentary with some words of caution, stating that the current exceptionally low rates of interest would not stay that way forever.  His opinion is that once the economy is in a suitable state of recovery "inflationary pressures" will ensure that rates go up, meaning that some overstretched homeowners will inevitably have to sell up.  This would in turn see an increase of property coming to market and therefore drive down house prices once more.  This is the scenario that has prompted some economists to warn of a "double dip", which could see the price of property fall a further 15%.

Land Registry Record Biggest Leap in Value since July 2004

Although one month behind the big lenders (namely Halifax and Nationwide), the Land Registrys house price index is regarded as being more accurate because it is produced from all completed property sales in England and Wales.  Its figures showed a rise of 1.7% in house prices for the month of July, which is its biggest monthly rise for five years & although prices are down 11.7% on the same time last year.  It values the average house price at £155,885 & slightly less than that of Nationwide.  There was an average of 35,848 sales per month between the months of February and May & down from 61,743 for the same period of last year.

The Land Registry is one of the few reports that maps house prices down to a local level; Wales saw the biggest increase in prices (up by 3.1%) in July with Yorkshire up Humber being at the other end of the scale (up by 0.9%). Apparently, if you live in a flat or a terraced property you are most likely to have felt the slump. Owners of flats can expect to have had an average of 12.7% wiped off their value in the last year with terraced house doing even worse & down by 12.9%.  This compares to semi-detached houses being down by 11.3% and detached houses down by 10.2% in the same period.